Groupe Michelin managing partner Michel Rollier has spoken again of the tire manufacturer’s plans to invest $2 billion in increasing its capacity in emerging markets between now and 2012.
While attending the opening of the 2010 Challenge Bibendum event in Rio de Janeiro, Brazil, Rollier was quoted as saying, "our problem is that the growth of our capacity is insufficient compared with demand.
“We cannot equip a manufacturer in North America and tell him we’re not able to do it in South America," he explained.
Rollier’s comments follow suggestions from some sources that Michelin is lagging behind its main competitors when it comes to its presence in the emerging BRIC (Brazil, Russia, India and China) countries. However, in the future, BRIC countries are expected to have “an increasing share in the sales revenues of Michelin tires,” managing partner Jean-Dominque Senard said.
In order to achieve this, Michelin’s plans include $400 million of investment in Brazil to expand its two factories in Campo Grande and Itatiaia. For China and India, Michelin’s focus will reportedly be on commercial vehicle tires. Michelin has previously announced plans to build an $800 million factory in India and has plans to invest a similar amount in a factory in China. However, perhaps unsurprisingly given macro-economic instability and the previous experience of other tiremakers the former USSR, Russia is not a priority for now, Rollier said.
Interestingly, Rollier added Indonesia and Eastern Europe to its list of emerging markets interests: “From a share of 33% now, we expect the growing markets of BRIC, Indonesia and Eastern Europe to have a share of 40% in the value of our sales,” he told journalists at the Challenge Bibendum event, with a 10-year time frame in mind.
BRIC countries currently contribute about 23% of the tire major’s production, but this could grow to around 30%. Michelin has 72 plants in 19 countries in total. (Tyres & Accessories)
