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Why your next Porsche might have tyres from Japan
WHAT do luxury car brands such as BMW and Porsche have in common with Chelsea Football Club? Both are part of Japanese tyre maker Yokohama's efforts to bolster its image and grow sales, as it embarks on a new business plan designed to deliver operating income of 70 billion yen (S$85.8 million) by 2020, on the back of 700 billion yen in sales.
The company, which turned 100 last year, enjoyed record results in 2017, with 51.9 billion yen of operating income from sales of 668 billion yen. In comparison, French brand Michelin is roughly four times larger in terms of revenue.
Cracking the European car market by supplying tyres to its carmakers will be a "strategic emphasis" for the Japanese brand, said Masataka Yamaishi, The Yokohama Rubber Company's president. "We are cultivating business with not only Japanese automakers but also European automakers and have secured a growing number of fitments on luxury models such as Audi, Mercedes-Benz, and Porsche. And we have begun to supply original equipment tyres for BMW and Volkswagen."
Mr Yamaishi was speaking to tyre dealers here at the launch of three new products on April 15. One new tyre is aimed at vans, and lasts 50 per cent longer than its predecessor, while the other two have characteristics specifically suited to European cars.
The Advan Sport V105zps is a high performance tyre that gives sporty handling and strong traction, while the Advan dB V552 was created for comfort; Yokohama says the latter is the quietest tyre it has ever made.
With new products like these, Yokohama expects to grow its business supplying European car factories fourfold by 2020, compared to 2014.
Yet, while that part of the business is picking up, local distributor YHI Corporation's managing director Richard Tay said dealers in Singapore face increasingly tough conditions. Cars have become more varied and now use a larger variety of tyres. "In the past, 32 sizes of a given tyre could cover 75 per cent of market demand. Now we need at least 62 tyre sizes," he said.
Smartphones and the Internet have altered consumer behaviour and squeezed dealer margins by raising the transparency of product information, he added. "Moreover, rental and labour costs keep increasing every year," he said.
Dealers will have to improve their service quality to counter the situation, he said, adding that YHI intends to "share its resources" to help.
At the factory level, the tyres themselves have room to evolve and keep up with new requirements."Along with the advance of electric vehicles, the demand for low rolling resistance, weight reduction for tyres is expected to further increase," said Takeshi Fujino, the general manager of Yokohama's overseas sales and marketing department.
Although tyres have been stagnant in appearance, engineers do find breakthroughs, sometimes from unexpected sources. Yokohama discovered that oil derived from orange peel can change rubber for the better, so it now mixes the stuff into its tyres. "Orange oil has the effect of increasing the grip power by softening the rubber without increasing the rolling resistance," said Mr Fujino.
The challenge for tyre companies is to make such breakthroughs visible to consumers who tend to view its products as round, black and largely homogenous.
Perhaps the next best thing is to simply increase brand recognition, which is something the tie-up with Chelsea FC has done. "Our logo's exposure and our name recognition multiplied when Chelsea FC won the league championship in the 2016-2017 season," said Mr Fujino. More goals from Chelsea could help propel Yokohama into the premiere league of tyres.