Foreign companies ramp up investment in tyre production

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More tyre producers are ramping up investment in Vietnam to capitalise on the opportunities brought by free trade agreements.
foreign companies ramp up investment in tyre production
Foreign investors are increasing tyre production capacity in Vietnam 

Kumho Tire, one of the world’s leading tyre manufacturers, has today that they will be investing $305 million to expand upon their Vietnam tyre plant and expects to double its production capacity by 2023. Upon the completion of the expansion in Vietnam, the company forecasts to produce at least 9.3 million tyres per year.

The project for expansion will gradually be funded beginning from the third quarter of 2021 through the first quarter of 2023 in which a new section of the building will be added to the vacant lot currently within the overall facility compound.

Kumho Tire is currently operating eight manufacturing facilities located in South Korea, China, the US, and Vietnam. 

“As a company, we are heading in a very positive direction and part of our strategy is to increase our production capacity ahead of the growing demand in order to ensure product availability for our customers and support the continued growth of partnerships,” said Il Taik Jung, president and CEO of Kumho Tire.

Another manufacturer, Jinyu Tire, has poured an additional $312 million into its tyre manufacturing facility in Tay Ninh. Jinyu has begun production of its first truck and bus radial (TBR) tyres at the new factory in Vietnam, which will have the capacity to produce up to two million tyres annually.

The Vietnam facility is Jinyu’s first overseas production base. With the new facility, Jinyu aims to strengthen its global supply chain and provide a solid base for further globalisation strategies, alongside being able to provide products and services to more customers internationally as well as in the Vietnamese market.

Meanwhile, Ohio-based Cooper Tire & Rubber Company has agreed to form a joint venture with Sailun Vietnam Co., Ltd. to build a manufacturing plant with the capacity to produce more than 2 million truck and bus radial (TBR) tyres annually. The facility will be located near Ho Chi Minh City at the site of Sailun Vietnam’s existing operations. Cooper will own 35 per cent of the new venture.

Last year, the project has increased its capital with an additional $130 million. The initial investment capital of the project was around $280 million.

Zhongxue Yuan, chairman and president of Sailun Group Co., Ltd., said that the company will expand its partnership with both US and Vietnamese partners to supply its tyre products across the world. To facilitate the goal, the company will continue to increase its product quality, develop a research and development centre in Ho Chi Minh City, as well as expand manufacturing activities.

In 2020, the volume of exported rubber reached an estimated 1.75 million tonnes, worth $2.38 billion, up 2.8 per cent in volume and up 3.5 per cent in value against last year. The average price of export rubber in November posted more than $1,328 per ton, a decrease of 1.53 per cent on-year, according to the Ministry of Agriculture and Rural Development’s Agro Processing and Market Development Authority.

Vietnam’s tyre industry has started to recover from the COVID-19 pandemic thanks to an expanding export market as well as favourable policies for the domestic automobile industry. Besides, China has difficulties in exporting tyres to the US because of the trade conflict, which has created opportunities for other countries to expand distribution channels, including Vietnam.

Moreover, the US Department of Commerce (DOC) has decided against imposing anti-dumping duty on Vietnam’s passenger vehicle and light truck tyres. Accordingly, major tyre exporters/producers of Vietnam such as Sailun, Kenda Rubber, Bridgestone Tire Manufacturing Vietnam LLC, Kumho Tire and Yokohama Tire Vietnam were determined not to have committed dumping.

A statement from Vietnam’s Ministry of Industry and Trade (MoIT) said this is encouraging news given the US’ status as Vietnam’s most important market for car tyres, with the export turnover of the above-mentioned firms making up 95.5 per cent of the country’s total tyre exports to the US in 2019 at $469.6 million.

“A zero per cent anti-dumping duty would help Vietnam’s major tyre producers to continue exporting to the US,” stated the MoIT, adding this is important as the domestic production of tyres is facing fierce competition from imported products of Thailand and China.

“Vietnamese tyres would gain considerable advantages against those from South Korea, Taiwan, and Thailand that are subject to dumping rates from 13.25-98.44 per cent in the US market,” noted the ministry.

 

By Thanh Van

Nguồn: Vietnam Investment Review

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