RUBBER MEETS ROAD
Tyre maker Goodyear Thailand remains optimistic about the country’s automotive industry this year.
SET-listed tyre maker Goodyear Thailand remains optimistic about its outlook for the country’s automotive industry this year despite aggressive tyre market competition.
Managing director Finbarr O’Connor said the company is confident of achieving continued success this year both at home and abroad.
Last year, Goodyear posted total revenue of 4 billion baht, up 2.6% from the year before. But the majority of growth was contributed by exports, with revenue of 2.27 billion baht, up 10.3%. The company’s domestic sales fell by 6% to 1.73 billion baht.
Mr O’Connor said 2017 was highlighted by several macroeconomic issues and the company did well in light of challenging dynamics, including a year-on-year decline in the consumer replacement tyre industry, a significant increase in raw materials this half and a tougher competitive environment for new entrants.
“Both consumer tyres and the aviation tyre business contributed to Goodyear’s export growth, while our domestic sales declined slightly as a consequence of the industry slowdown and other market headwinds,” he said.
The company’s annual report also stated that Goodyear has to face two key risk areas. The firm’s original equipment (OE) tyre products rely on demand from the new automobile market, which directly affects automobile manufacturers in Thailand.
Although the OE channel is a lowerprofit segment, it is still important for Goodyear Thailand because of the connection between OE production and replacement demand.
There are also challenges related to domestic automobile sales volume, which may affect overall demand for the automobile market going forward.
Meanwhile, tyre demand in the replacement channel depends on the quantity of existing vehicles, which continues to grow.
The company has significant revenue coming from replacement sales, which generally have a higher margin than OE.
Competition in the replacement channel has become more intense from the growing number of tyre manufacturers and dealers in Thailand, primarily lower-tier and Chinese brands.
Goodyear will continue expanding its distribution channels, increasing brand awareness and staying agile, while adapting its plans to keep up with emerging market conditions, Mr O’Connor said.
He said the 5.63-billion-baht radial aircraft tyre factory in Pathum Thani remains on track to meet growing radial aero market demand.
The expansion will be divided into three phases over a 10-year period, with the second and third phases being subject to market demand and other conditions.
The first phase, from 2016 to 2018 with an investment cost of 1.62 billion baht, is targeted to be operational this year, with commercial airlines rapidly converting their fleets from bias to radial tyres.
The second phase targets investment worth 2.97 billion baht for 2018-22, while the third phase, worth 1.03 billion, is slated for 2023-25.
The target customers are commercial airlines both in Thailand and abroad.
“Goodyear will reassess the market, the business performance of phase one as well as other relevant factors,” Mr O’Connor said. “A small portion of the aviation tyres [produced here] are used in the country, while the vast majority are exported as demand for them continues to see steady growth because of airline industry expansion, as well as the emergence of budget airlines and airports to meet the needs of the growing middle class, especially in the Asia-Pacific region.”
Established in 1968, Goodyear Thailand is celebrating its 50th anniversary. The company operates a production facility in Pathum Thani with 1,000 employees.
The factory ships tyres to Asia, the Middle East, Oceania and South Africa.
US-based Goodyear Tire & Rubber Co is the major shareholder in Goodyear Thailand with a 66.97% stake.
Goodyear AutoCare, a retail network, includes more than 70 stores across Thailand and has spent millions of baht to build up the brand’s reputation.