Cars

Huayi, Michelin to launch joint car tire product line

By Chen Qide (China Daily)
Updated: 2011-04-28 14:18

Shanghai Huayi Group's booth at a trade show in Shanghai. [Photo / China Daily]

New plant is expected to create annual sales of 4.5 billion yuan

CHAOHU, Anhui - Shanghai Huayi Group will relaunch Warrior passenger car radial tires from its new 3.2-billion-yuan ($491 million) plant at the Anhui Industrial Park.

The company had to give up rights to its traditional Chinese brand a decade ago when it set up a joint venture with the French tire maker Michelin SA.

Related readings:  Michelin's Chinese dilemma  Michelin-rated dim sum for the hols  Michelin navigates its way into nation's lucrative map market  Galaxy of Michelin stars

Double Coin Holdings Ltd, Michelin's joint venture with Huayi, held the rights to manufacture Warrior tires, but the brand shrunk as the venture produced only 6 million tires in the past decade.

Double Coin formally ended the relationship in early 2010.

The new factory, which will be designed by Michelin, is expected to have an annual capacity of 15 million tires by 2013, targeting medium-grade and high-end sedans in the domestic and overseas markets, Liu Xunfeng, president of Huayi Group, said.

"Once it is put into operation, the new plant is expected to create annual sales of 4.5 billion yuan. If the market demand grows, the plant will expand its production capacity from 15 million tires to 30 million tires," Liu said.

"It is a milestone for Double Coin in the history of its tire development," said Liu, who is also chairman of Double Coin Holdings Ltd. "It will transform Double Coin into a giant manufacturer of truck, bus and car tires in China."

According to Liu, Huayi has signed a Memorandum of Understanding with Michelin on setting up a joint venture to manufacture Warrior car radial tires.

The French tire maker will have a 40 percent equity stake in the venture, while Double Coin will hold the remainder and the rights to the brand, he said.

"Negotiations are under way. If things go smoothly, the joint venture is expected to be concluded by the end of this year," Liu said.

Huayi Group has invested 7.5 billion yuan in the industrial park to build facilities to produce 600,000 tons of methyl alcohol, 500,000 tons of acetic acid and 300,000 tons of ethyl acetate, which are used to produce tires.

The plant, occupying an area of 62 hectares, is the first project Huayi has launched under its five-year program and will provide big impetus to the development of the industrial park, Liu said, adding that Huayi Group will give strong financial support to the project.

"We have made a pre-marketing effort to test 10,000 Warrior tires which were produced with our own technology in a plant we chose, of which 70 percent have already been sold," said Zhang Wanyou, deputy general manager of Double Coin.

According to experts, the huge demand for vehicles in China will provide a big market for the company. Statistics from the China Association of Automobile Manufacturers show that China produced 15 million vehicles in 2010, up 10 percent over 2009.

Foreign tire manufacturers such as Michelin, Japan's Bridgestone Corp, US-based Goodyear Tire & Rubber Co, and Germany's Continental AG are injecting heavy investment in China to expand tire-production capacity.

"But we have full confidence in our efforts to make our brand stronger in the fierce competitive market," Liu said.

He said the group has made marketing and technical preparations to provide the market with 6 million tires next year and will be able to service the requirements of Chinese automakers.

The company's objective is to manufacture 20 million truck and car tires and reach annual sales of 20 billion yuan by 2015 once the car tire project goes into full operation, Liu said.

Double Coin now has established three bases in Rugao in Jiangsu province, Shanghai and Chongqing to manufacture a total of 7 million truck and bus radial tires a year.