Tyre Industry – Strong Growth Forecast for India and Indonesia

Global tyre companies are moving their production facilities closer to the growing markets, especially Asia. For example, Pirelli, Continental, Michelin and Bridgestone already have plants in China, making it the largest tyre producing country in the world with production value reaching US$40.6 billion in 2011. However, now global companies are looking for new locations.

Flourishing India’s and Indonesia’s automotive industries and skyrocketing household car ownership coupled with considerably lower average wages compared to China make the two countries very attractive for tyre producers. As a result, tyre production in India and Indonesia is expected to grow by over 10% per annum until 2017. New plants are expected to become operational during the forecast period:

• Michelin is expected to build a new factory in SIPCOT Thervoy Kandigai Industrial Park in Thiruvallur district, India. The plant is expected to start operations in late 2012 or early 2013 and focus on the growing Indian market. Production capacity is expected to reach 2 million tyres a year.
• Bridgestone is expected to open a new factory in Pune, India in 2013. It will be the second Bridgestone factory in India with expected maximum capacity of 13,000 tyres per day. The company expects high local demand growth due to improving road infrastructure and thus growing car ownership figures.
• Hankook is opening its Lippo Cikarang plant in West Java, Indonesia in the end of 2012 with initial capacity of 6 million tyres per annum. Around half of production should be exported to North America, while the other half will serve growing Asian markets.
• Pirelli is planning to invest over US$126 million in a new tyre factory in Indonesia through a joint-venture with Astra Otoparts. The plant will be located in Karawang, West Java and should start operations in 2013 with production volume reaching 2 million tyres in 2014. Production should increase to 7 million tyres by 2016.