Sumitomo Rubber exits Chinese truck and bus tyre market
On 17 August, Sumitomo Rubber (China) announced that the company is ending the sale and production of truck tyres in China. From 2023, the company will no longer produce and sell truck and bus tyres for the Chinese market. From April 2024, Sumitomo Rubber (China) will no longer manufacture truck and bus tyres for overseas markets.
The well-known Dunlop brand of truck and bus tyres, which Sumitomo controls in China, will be the most affected. According to Sumitomo Rubber China’s official website, the products currently on sale under the truck and bus tyre category include four lines: the truck tyre series (12 models); light truck tyre series (four models); coach bus tyre series (one model); and bus tyre series (three models). Sumitomo Rubber has promised that the after-sales service policy for Dunlop brand truck and bus tyres already sold will continue until 2025. During this period, consumers can enjoy due rights and services attached to products sold prior to the exit.
Sumitomo Rubber said that the business strategy adjustment would help the company concentrate its valuable resources and devote itself to research and development for passenger car tyres. In the tyre company’s view, China’s new energy vehicle market and its aftermarket have tremendous potential, and consumers will have immense demand for replacement passenger car tyres in the future.
After hearing about Sumitomo Rubber’s move, the Chinese tyre industry seemed highly rational. Several tyre industry practitioners told Tyrepress that one of the main reasons for Sumitomo Rubber’s decision was “low profits for truck and bus tyres”. As one dealer said: “Many Chinese consumers only pay attention to price and wear resistance when choosing truck and bus tyres. Foreign brand products may be superior regarding safety, material, formula and performance, but Chinese consumers do not value these indicators in many cases.” Based on such purchasing rationales, relatively high prices often make international tyre brands uncompetitive in China. Tyre companies that do not want to compete with low prices may temporarily have to abandon the Chinese truck and bus tyre market.
In addition, it is difficult for the Chinese factories’ products to obtain as high profits as before in overseas markets, which also prompted Sumitomo Rubber (China) to suspend production. On the one hand, the price of raw materials and labour in China is getting higher and higher. High production costs have further eroded tyre company’s profits. On the other hand, the two major export markets – the United States and Europe – have been known to conduct anti-dumping and anti-subsidy investigations on Chinese-made truck and bus tyres from time to time. With local Chinese tyre manufacturers becoming enthusiastic about building factories overseas and avoiding trade risks by shifting production capacity, Sumitomo Rubber may have similar plans.
Sumitomo Rubber entered the Chinese market in 2002 and has two tyre factories in Changshu and Changsha, China. In November 2021, Sumitomo Rubber’s Changshu plant launched a technical transformation project, preparing to invest 93.5 million yuan (£11.58 million pound, 13.66 million euros) in adjusting the production lines, which renovated part of its truck and bus tyre production lines and let it produce passenger car tyres. After adjustment, the annual output of truck and bus tyres at the Changshu production base was 945,000 units, a decrease of 105,000 units. In light of the latest news, it seems Sumitomo Rubber (China) was already considering adjusting its business strategy.