Estudio Mercado Neumaticos A Nivel Mundial

World Tyre Manufacturers
Market Analysis – 2010-2015 Trends – Corporate Strategies
Report code: 0XCHE09

Analyst: Petra Frent
Publication: October 2010
The 5 phases of Xerfi Global’s
Global Markets and Competition reports
Phase 1: Identification of the playing field
At Xerfi Global, we believe that international classifications are not the only valid definition of
a market. It is the companies that make the sector and not vice-versa. During our first
brainstorming session, we strive to give a clear-cut definition of the scope of the report.
This report was written under the

Phase 2: Identification of market leaders supervision of:
During the second phase, Xerfi Global’s analysts identify the players who will be studied in
the report. Our aim is not only to classify by total sales, but also to detect tomorrow’s movers
Petra Frent
and shakers, especially those from emerging markets
Other main contributors include:

Phase 3: Identification of the main market indicators
Using the best and most up to date international sources, Xerfi Global’s experts handpick the Alberto Balboni
most relevant indicators pertaining to both supply and demand.
Alexander Law
Aurélien Duthoit
Phase 4: Identification of corporate strategies
During a further brainstorming session, the Xerfi Global team aims to decipher the main Hélène Alary
corporate strategies and key future trends. Laurent Marty
Phase 5: Identification of the key conclusions

Thanks to a final brainstorming session, drawing on the knowledge of all the members of Xerfi
Global, the main conclusions are debated and ultimately summed up in no more than a dozen
slides. Concision, precision and accurate forecasts are our main aims.
World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 2

Table of contents
0. CONCLUSIONS 9
1. MARKET FUNDAMENTALS 21
1.1. Key characteristics ________________________________________________________________________________________ 22
Key characteristics 22
1.2. Tyre industry overview ____________________________________________________________________________________ 23
What is the business? 23
What are the products? 24
1.3. Supply and demand _______________________________________________________________________________________ 25
Who are the suppliers? 25
Who are the customers? 26
1.4. Market leaders ___________________________________________________________________________________________ 28
Who are the key players? 28
1.5. Geographic data __________________________________________________________________________________________ 29
Where are activities located? 29
2. MARKET ENVIRONMENT AND PROSPECTS 30
2.1. Overview of the market ____________________________________________________________________________________ 31
Pestel analysis 31
2.2. Supply __________________________________________________________________________________________________ 34
Raw materials 34
Production and exports 35
Raw material prices 36
Production prices 37
2.3. Demand _________________________________________________________________________________________________ 38

Automobile production 38
Global vehicle fleet 39
Online retailing 40
2.4. International Trade _______________________________________________________________________________________ 41
Exports 41
Ranking 42
2.5. Regional overview_________________________________________________________________________________________ 43
3. CORPORATE STRATEGIES AND COMPETITION 44
3.1. Competitive environment __________________________________________________________________________________ 45
Driving forces of the industry 45
Global market share 48
Small-scale players 49
3.2. Business models __________________________________________________________________________________________ 50
Diversification 50
Strategic alliances 52
Vertical integration 53
3.3. Geographical presence _____________________________________________________________________________________ 54
Presence on the main geographic markets 54
Operations in emerging markets 55
3.4. Brand strategy ___________________________________________________________________________________________ 56
Multi-brand versus single-brand 56
3.5. Differentiation strategies ___________________________________________________________________________________ 57
Case studies 57
3.6. Outlook _________________________________________________________________________________________________ 60
Investments 60
3.7. Ranking _________________________________________________________________________________________________ 61
Net sales 61
Ranking by operating margins 62
4. COMPANY PROFILES 63

4.1. Bridgestone ______________________________________________________________________________________________ 64
Company Overview 64
Business segments 65
Corporate strategy 66
Recent events 67
Key data 68
Revenues by business segment 69
Revenues by region 70
Operating margin 71
Research and development 72
Statistical data 73
4.2. Michelin _________________________________________________________________________________________________ 74
Company Overview 74
Recent events 77
Key data 78
Revenues by segment 79
Operating margin 81
Statistical data 83
4.3. Goodyear ________________________________________________________________________________________________ 84
Company Overview 84
Recent events 87
Key data 88
Segment volumes 89
Operating margin 91
Statistical data 93
4.4. Continental ______________________________________________________________________________________________ 94

Company Overview 94
Recent events 97
Key data 98
Operating margin 101
Statistical data 103
4.5. Pirelli ___________________________________________________________________________________________________ 104
Company Overview 104
Recent events 107
Key data 108
4.6. Sumitomo________________________________________________________________________________________________ 114
Recent events 117
Key data 118
4.7. Yokohama _______________________________________________________________________________________________ 124

Recent events 127
Key data 128
4.8. Hankook ________________________________________________________________________________________________ 134
Recent events 137
Key data 138
4.9. Cooper __________________________________________________________________________________________________ 144
Recent events 147
Key data 148
Product lines 149
4.10. Maxxis _________________________________________________________________________________________________ 154

5. STATISTICAL APPENDIX 155
6. INFORMATION SOURCES 166

International organisations 167
Press 167
Corporate websites 168
7. ANNEXES 169
7.1. Overview of the market ____________________________________________________________________________________ 170
2009 sales 170
2010 sales 171
7.2. Demand _________________________________________________________________________________________________ 172
Market breakdown 172
Profile of the leading companies 175
Net sales 177
Operating margins 178
7.3. Presence in main geographic segments________________________________________________________________________ 179
Asia 179
India 181
South America 182
North America 184
Europe 185
7.4. Differentiation strategies ___________________________________________________________________________________ 186
7.5. Regional overview_________________________________________________________________________________________ 188
Asia-Pacific 188
Latin America 189
North America 190
Europe 191
Africa and Middle East 192
Statistical framework 193
Data 194

0. Conclusions

Key trends by 2015
 Tyre manufacturers have a major goal: further global expansion of their operations. Although
demand in mature economies will pick up, the immense growth opportunities in emerging markets have
led tyre companies to decide on investing in boosting capacity in already established plants or building
new ones.
 Tyre manufacturers’ profitability is to a great extent dependent on raw material prices: they are
expected to remain highly volatile, thus putting more pressure on companies’ operations. In order to secure
procurements, tyre makers are highly vertically integrated structures: groups such as Michelin own and run
several natural rubber plantations in the ‘rubber belt’ countries.
 Small-scale players will continue to take market shares of the ‘Big Three’: Michelin, Bridgestone
and Goodyear have held the greater proportion of total industry sales, but their share is gradually
decreasing as companies from emerging countries and China in particular, are expanding their sales and
operations.
 Groups are to increase their focus on their core business: diversified groups have been divesting
their other businesses, and generate more than three quarters or revenues from tyre operations.
Furthermore, top-notch players are multi-specialists, manufacturing tyres in all market segments (from
passenger cars to aviation, from premium brands to private brands).
 In making and marketing their products, tyre manufacturers’ pursue either differentiation (the ‘Big
Three’ are trend-setters in all aspects of innovation in the industry, dominating the ultra-high performance
and premium tyre segment) or cost leadership strategies (the large majority of such players are companies
from China and Taiwan).

Tyre production continues to expand globally
Total tyre production worldwide
unit: 1,000 tons of rubber
1,400
Recently, weak economic conditions,
troubled financial markets, and
detrimental exchange rates resulted in a
drop in rubber tyre sales volumes in
North America and Europe. Some 1,250
companies recouped their losses by
increasing sales in the emerging
markets and expanding production in
developing countries where production
costs are lower. 1,100
Over the next decade the economic
landscape will improve, as overall
market indicators strengthen and global
economic activity picks up: strong
(China and India) to moderate GDP 950
growth, increased industrial production
and improved consumer activity and
freight movement.
The demand in the automotive industry
is also picking up pace, driving demand 800
for tyres and growth is foreseen in both 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-
industries for the years ahead. 2015
CAGR
Source: Xerfi Global. Primary source: JATMA.

Raw material prices are set to remain volatile
Prices for main raw materials – main trading indexes
unit: %
Tyre production is the biggest 60% Natural rubber Synthetic rubber

consumer of synthetic and natural
rubber. The industry uses the majority
of natural and synthetic rubber output. 40%
The sharp price volatility for natural
rubber and petroleum-based materials
contributes to the difficulty in
20%
managing the costs of raw materials.
The cost of raw materials represents
the largest component of total cost of
0%
goods sold or approximately 50
percent on average, with variations
from one company to another.
While the industry will continue to -20%
grow, material shortages and price
increases are evident. Raw material
volatility has been and remains an -40%
issue, with price increases expected to
be announced by all companies in
2010. -60%
2008 2009 2010
Source: Xerfi Global. Primary source: International Rubber Study Group.

Most tyre companies are vertically integrated
Vertical integration of tyre companies
Rubber and tyre manufacturing companies

tend to be highly vertically integrated.
There is a growing trend in the industry to Raw material suppliers
own rubber plantations because it creates a
strong competitive advantage. Michelin for
instance, owns and operates six rubber
plantations (one located in Latin America
and the others in West Africa and Asia),
while Goodyear Tyre and Rubber Company
has recently invested in two new synthetic
rubber plants. Tyre production facilities
Further down the line, many tyre
companies own and operate their own
distribution networks: Cooper has five
distribution centres and five sales offices in
Europe and Michelin has two integrated
tyre distribution and service networks,
Euromaster and TCI. The Korean Regional
Headquarters of Hankook operates over
Distribution networks
2,100 direct-run and franchised dealerships.
Source: Xerfi Global.

New players have been cutting into the Big Three’s market share
Change in market share of the global players
unit: %
Michelin Goodyear Bridgestone Others
For most of the history of the tyre 100%

industry, the top three leaders have
remained unchanged, with Bridgestone 90%
and Michelin battling for first position.
The results for fiscal 2009 and the first 80%
half of 2010 confirm Bridgestone’s 43%
54%
supremacy in the industry.
70%
Although in 2000 ‘the Big Three’ held
almost 60% of the whole market share,
60%
this proportion has gradually declined
over the last decade, reaching 46% in
2008. This trend is likely to continue, 50%
as smaller players competing on
volume and low-pricing strategies 40%
continue to increase their market
shares. Such is the case in emerging 30%
countries or China, where domestic tyre
manufacturers have doubled their sales 20%
both in volume and value over the past
decade, and this development is set to 10%
continue.
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Xerfi Global. Primary source: Bridgestone.

Asian manufacturers dominate the top 10
Tyre companies ranking
GROUP NET
GROUP COUNTRY PRODUCTS
SALES (2009)
As far as the top three are Tyres, chemical

Bridgestone €19.8 bn
concerned, the picture has products, others
remained unchanged for years
with Bridgestone, Michelin and Michelin €14.8 bn Tyres
Goodyear setting the trends for
product innovation in the industry.
Goodyear €11.9 bn Tyres
These are players present in all
market segments and geographical
regions. Tyres, automotive
Continental €20 bn
parts
The 10 largest tyre manufacturers
account for about 80% of the Pirelli €4.4 bn Tyres
world’s tyre sales, while the
leading three companies,
Michelin, Bridgestone, and Sumitomo €3.9 bn Tyres, sport goods
Goodyear, accounted for 46%.
Tyres, industrial
To compete with the ‘Big Three’, Yokohama €3.5 bn
products
smaller manufacturers have
tended to focus on a specific niche Hankook €2.9 bn Tyres
(specialty tyres) or in regional
markets. Moreover, this trend will
continue. Cooper €1.9 bn Tyres
Maxxis €1.8 bn Tyres

Source: Xerfi Global with companies’ annual reports.

The ‘Big Three’ are multi-specialists, present in every market segment
Market segments of main tyre companies
Types of tyre
Company Passenger car Heavy truck Off-the-road Civil Agricultura
Two-wheel Aircraft
and light truck and bus vehicle engineering l
Bridgestone       
Michelin       
Goodyear       
Continental  
Sumitomo    
Pirelli   
Yokohama  
Hankook  
Cooper  
The tyre industry is a highly competitive one, especially in the passenger vehicle and truck tyre segments, where top-notch players
face fierce competition from low-cost producing companies. However, specialty tyres (agriculture, aviation, two-wheel, earthmovers)
which require extensive R&D resources and specific know-how, is a field where flagship brands such as Michelin, Bridgestone or
Goodyear are prominent.
The specialty segment represents 15% of the total revenues of Michelin or 20% of Goodyear’s annual sales. The Big Three’s
diversified array of distribution channels includes specialty tyre wholesalers and dealers. Michelin is the market leader in earthmover
and aircraft radial tyres, the European market leader in agricultural tyres and one of Europe’s leading motorcycle tyre brand, a segment
where top positions belong to Pirelli and Bridgestone.

The replacement market will remain the largest market segment
Customers of the tyre industry
Main customers of the tyre Vehicle manufacturers or OEMs

industry In the wake of the recent financial crisis, there has been a noteworthy change in
demand for tyres in mature markets, where increasing orders for vehicles with high
fuel economy led to a shift to smaller size passenger tyres light truck tyres, products of
ORIGINAL TYRE lower profitability to the industry.
EQUIPMENT DISTRIBUTION
MANUFACTURE for replacement of
RS original tyres Replacement
€25bn €75bn In order to boost sales in the replacement market, tyre companies pursue extensive
marketing campaigns using tremendous resources and budget.
The global visibility guaranteed through extensive media interest, has made tyre
makers strike exclusive supply deals in Formula One or other motor sports: Pirelli is
currently the sole supplier for the GP3 series, the World Rally Championship and has
been chosen as the exclusive supplier for Formula 1 between 2011 and 2013;
Global tyre market value: estimated at €100 bn in Bridgestone is the official tyre supplier of the MotoGP and GP2 series.
2008 (of which light-vehicle tyres accounted for Another company intensively working on building a premium brand image is
60% and truck tyres for nearly 30%). Hankook: since 2005, Formula 3 in Germany has been racing exclusively on Hankook
tyres.
Global tyre market volume: estimated at around
1.1 bn tyres for cars and light trucks and 125 mn
for trucks and buses in 2008.

Leading players are planning to expand their presence in emerging markets
Bridgestone is set to invest $540 mn between 2010 and 2013 to build a car and truck
tyre plant near Pune, India, to support growing demand for radial tyres in Asia and an
additional $142 mn over two years to expand capacity for passenger tyres at its plant in
Poznan, Poland, by nearly a third.
One of the industry leaders, Michelin, plans to invest $870 mn to build a truck and off-
the-road tyre plant in Tiruvallur, near Channai in southern India in the upcoming years.
Sumitomo is another major player with an eye on the Chinese tyre market: it will spend
$297 mn to build a passenger tyre plant in Changsha, China, with production expected
to start by July 2012.
The Pirelli Group intends to reinforce its presence and to invest heavily in Brazil. The
300 mn US dollars of total investments in the 2008-2011 period are destined one third
for research and development and the remainder for increasing production capacity.
The new investments will enable a 20% increase in car and motorcycle tyre production.
Pirelli aims to increase tyre production in eastern Europe, namely at its factory in
Slatina, Romania: the €250 mn investment is to be carried out between 2009 and 2011.
Enjoying rapidly increasing demand, Hankook is completing a plant expansion project

in Hungary, which is scheduled to start operations in 2011, when annual output will
total 10 mn units (from 5 mn currently). Another project to build a new plant capable of
producing five mn tyres a year by 2013 is seriously being considered.

Top tier companies dominate the premium tyre segment
Tyre industry mix in mature economies
unit: %
Competition in the tyre industry
unfolds around either product 100%
differentiation or cost domination
strategy. Economy
The market is divided into the premium
and economy segments: the former
80%
consists of two tiers, with tier 1 as a
market with flagship brands such as
Bridgestone, Goodyear, and Michelin
and tier 2 as a market segment with
secondary or former tier 1 brand tyres 60%
such as BFGoodrich, Uniroyal, and
General.
The tier 3 segment is characterised by Mid-tier
economy or mass-market tyres that
consist of private brands and lower 40%
level “associate” brands owned by
major producers. Small players or
domestic companies in emerging
countries make up the bulk of tier 3.
In developed economies, consumers 20%
favour companies with higher
technology and brand strength, while in Premium
emerging countries economy and mid-
tier tyre producing companies are
dominant. 0%
Source: Xerfi Global estimations. Primary source: annual reports.

Manufacturers in countries such as China are focusing on low-cost products
Prices for 215/70 R15 tyres in the United States

unit: dollars
TYRE BRAND PRICE

Companies have shown continued
selectivity with respect to their markets Primewell PS850
$ 52.10
(replacement versus original
equipment, branded versus private Triangle TR928
label). Largest players made significant $ 52.20
strategic business decisions to shift Chinese
brands
production toward higher-value tyres
and capitalise on consumer brand GT Radial Wingpro 70 $ 55.80
loyalty.
Most flagship brands such as Michelin, BCT S600 $ 62.20
Goodyear or Bridgestone have put
more emphasis on their ultra-high Cooper CS4 Touring $ 72.10
performance, touring, and winter tyre
offerings during the last few years, Goodyear Assurance $ 74.50
leaving low-cost production to overseas
manufacturers. BF Goodrich Radial T/A $ 75.40
There have been shifts in demand
involving lower-profile brands, such as Goodyear Assurance FuelMax $ 82.60
BF Goodrich and Yokohama and
economy brands from China and other Bridgestone Turanza EL 400 $ 87.20
developing markets, but no significant
swings in the private brand market. Michelin HydroEdge $ 107.40
Primary source: Tyre-easy.

1. Market fundamentals

1.1. Key characteristics Key characteristics
The tyre global market is dominated by ‘The Big Three’
The major product segments are original equipment tyres and replacement tyres
Diverse products
primarily for passenger cars, trucks, two-wheelers, aircrafts, and off-the-road vehicles.
Roughly 75% of tyre production is sold to the replacement market with only 25% going
to the original equipment manufacturers (the automotive industry). A fluctuation in the
Sales driven by the replacement market
production of vehicles is correlated with a decrease or increase in the tyre industry
revenues.
Tyres are largely a commodity, thus profitability depends on cost-efficient operations.

Small companies can compete by producing tyres or tyre-related products for niche
markets, such as bicycles or agriculture equipment. Large companies can afford the
Higher margins in the specialty segments
research to develop tyres from technologically advanced materials, and can invest in
high-margin segments such as radial tyres (for trucks, aviation, and motorcycle), civil
engineering or agricultural tyres.
55% of global market share is held by the ‘Big Three’ tyre manufacturers: Bridgestone
(Japan), Michelin (France) and Goodyear (United States). The major players in the
A highly concentrated sector
industry are highly specialised and competition is intense in major market segments
(passenger car and truck tyres in particular).
The primary raw materials used to make tyres are synthetic rubber, carbon black (for
traction), natural rubber, various chemicals and reinforcing components such as steel
Raw material costs for manufacturers continue to go up
wire, steel cord, and polyester. Both synthetic rubber and carbon black are derived from
petroleum or natural gas. Hence, rubber prices have increased in line with oil prices,
leading to a higher cost of production and an overall price boost of all tyre products.

1.2. Tyre industry overview What is the business?
Tyre sales in the replacement market account for more than 7O% of sales
Breakdown by market of tyre sales
unit:%
Original
equipment
manufacturers
The tyre industry sells its products in two 25%
main markets:
25% in the original equipment market
(automotive industry);
75% in the replacement market
(distributors who sell tyres to
companies or clients to replace original
equipment tyres).
Passenger car and light truck tyres together

with truck tyres correspond to almost 90%
of the total tyre market both by volume and
value.
Replacement
75%
Source: Xerfi Global. Primary source: companies annual reports.

1.2. Tyre industry overview What are the products?
Tyres for the passenger car segment are predominant

Main products of tyre industry
Companies in the tyre industry essentially

manufacture new tyres, but they can also
produce other rubber goods, such as inner
tubes or materials for tyre repair and
retreading (a process that extends the life
of a used tyre). TYRES
Tyre manufacturers may specialise by type
of vehicle or size of tyre, such as for cars,
motorcycles, trucks, air planes, farm
equipment, or bicycles.
There are manufacturers present in all
market segments (Michelin, Bridgestone,
Goodyear or Sumitomo). Most of the
companies concentrate only on selling PASSENGER CAR TRUCK AND BUS SPECIALTY
tyres for passenger cars and trucks AND LIGHT TRUCK Civil engineering
(Continental or especially domestic players Agricultural
Two-wheel
in emerging markets such as China for Aircraft
instance). However, some tyre
manufacturers have a strategic focus on a Around 60% of the Around 25% of the Around 15% of the
value of sales value of sales value of sales
certain market (Cooper produces only light
vehicle replacement tyres in the North
American market).

1.3. Supply and demand Who are the suppliers?
The tyre industry relies mostly on natural and synthetic rubber

Main raw materials used in tyre manufacturing Raw material usage
unit: % of total input value
Natural rubber
Rubber
Reinforcing
Synthetic rubber Synthetic fillers, 16%
rubber, 26%
Vulcanizing agents
Antioxidant
Compounding ingredients
Filler Chemicals,
Softener 13%
Carbon black
Reinforcing agents
Silica Natural
rubber, 28% Other, 17%
Steel cords
Tyre cords
Textile cords
Source: Xerfi Global. Source: Michelin.
Raw materials cost represent close to 40% of total purchases (according to 2009 data for Michelin, but with variations from one
company to another). Thus, optimising raw material usage is essential for securing rubber and staying profitable.
More than 100 raw materials are used in the production of tyres. Approximately half of the materials, including synthetic rubber, are
chemical products based on petroleum. As a result, the tyre industry is highly dependent on petroleum.
More than 90% of the natural rubber supply comes from Southeast Asia. Rubber trees grow only in the ‘Rubber Belt’, an equatorial
zone that stretches through Thailand, Indonesia, Malaysia, India, and China, accounting for 89% of the world’s natural rubber.

1.3. Supply and demand Who are the customers?
The industry sells tyres mostly for the replacement markets

Main customers of tyre industry
Vehicle Manufacturers or OEMs

The demand from the Original Equipment Manufacturers is derived and directly
Main customers of the tyre
industry correlated to the level of automotive production. Tyres are sold directly to the
automotive industry. Generally, one tyre company can supply several automobile
manufacturers (Hankook makes tyres for Ford, GM, Volkswagen or Audi).
ORIGINAL TYRE
EQUIPMENT DISTRIBUTION The replacement market
MANUFACTURE for replacement of
RS original tyres The demand in the replacement market depends on the size of the vehicle fleet, the level
€75bn of economic activity, the price of tyres and the quality of road infrastructure. The
€25bn
replacement market offers higher margins and is therefore extremely competitive.
The size of the replacement market is determined by the interplay of several factors:
economic activity slow-downs account for longer replacement intervals and lower
business mileage
retreading (or applying a new tread), a process that can extend the life of tyres at a
Global tyre market value: estimated at €100 bn in
significantly lower cost, thereby lowering replacement demand. Retreads are made
2008 (of which light-vehicle tyres accounted for
only in segments such as truck, bus and commercial aviation tyres. A tyre can be
60% and truck tyres for nearly 30%).
retreaded several times.
radial technology for passenger car, truck and bus tyres increases operating
Global tyre market volume: estimated at around
efficiency by delivering better mileage and minimising wear and tear. Radial tyres
1.1 bn tyres for cars and light trucks and 125 mn
represent roughly 90% of all tyres in developed economies, whereas their proportion
for trucks and buses in 2008.
is significantly smaller (under 60%) in emerging countries, leaving room for growth.

1.3. Supply and demand
Tyre are sold through multiple distribution channels

Tyre industry distribution channel
Multiple efforts are made in order to TYRE

secure various distribution channels on a MANUFACTURERS
global scale.
Customers can purchase a certain

brand of tyres directly through a
company’s own shop (flagship stores,
exclusive direct-run and franchise
shops), prime locations for promoting Original Equipment Replacement
products and essential for building Manufacturers
brand image.
Other distribution channels include .
multi-brand retailers, wholesalers (a

major UK-based European tyre dealer,
ATS, sells Michelin, Pirelli or Cooper
tyre brands to retail or business
Distributors :
customers) or independent dealers
Automotive industry Tyre wholesalers and retailers
who generally sell multiple tyre Proprietary/ franchised shops
brands. Automobile part retailers
Large fleet users (business)

1.4. Market leaders Who are the key players?
The market has been dominated by the ‘Big Three’ for over a decade
Largest groups in the tyre industry
GROUP NET
It was status quo for the top 10 in GROUP COUNTRY PRODUCTS
SALES (2009)
2009, except for Taiwan’s Cheng
Shin Rubber (Maxxis) slipping past Tyres, chemical
Bridgestone €19.8 bn
Japan’s Toyo Tyre & Rubber Co. Ltd. products, others
to come in 10th in the industry’s
ranking. Michelin €14.8 bn Tyres
China has the most companies of any
country (Triangle, Giti, Double Coin, Goodyear €11.9 bn Tyres
Double Star etc...). Hangzhou
Zhongce Rubber Co. Ltd. of Tyres, automotive
Continental €20 bn
Hangzhou is the largest of these, parts
ranked 11th. The Chinese firms’
Pirelli €4.4 bn Tyres
combined sales are more than 10
percent of the estimated world total.
Apollo and JK Tyre are two of the Sumitomo €3.9 bn Tyres, sport goods
main Indian companies in the
rankings, but MRF Ltd. is the largest Tyres, industrial
Yokohama €3.5 bn
Indian tyre maker. products
The U.S. has six companies, followed Tyres
Hankook €2.9 bn
by Taiwan with five (Kenda,
Nankang, etc), Japan and Russia
(Sibur etc) with four each, South Cooper €1.9 bn Tyres
Korea (Hankook, Kumho, Nexen)
with three. Maxxis €1.8 bn Tyres

1.5. Geographic data Where are activities located?
Tyre production sites are chiefly based in Asia

Global tyre production (volume) – breakdown by geographical area
unit: million tyres
EUROPE
NORTH
AMERICA 93
86 ASIA &
OCEANIA
326 303 214

204
46 41
182 167 2007 2008 437

424
2007 2008
MIDDLE 2007 2008
EAST &
17 17
SOUTH & 38 38
CENTRAL
AMERICA 2007 2008
34 33
49 49
2007 2008
Passenger vehicle tyres
Commercial vehicle tyres
Source: Xerfi Global with JATMA (2007 and 2008 data).

2. Market environment and
prospects

2.1. Overview of the market Pestel analysis
Growth is picking up in the industry

PESTEL analysis of the tyre industry
P olitics E conomy S ociety T echnolo E nvironme L egislatio
Widespread An upbeat E-business Road

support for the Increased infrastructure
+
business New type of tyres
automotive environment mobility needs for electrical development in
industry as a Emerging vehicles the emerging
major provider of markets Higher margins for economies
employment specialty tyres
-
Political unrest in Securing raw Longer tyre Environment
rubber supplying material The challenges life impacts Scrapping of regulations
countries. Employment
End of car
of sustainable demand end-of-life tyres regulations
scrappage Price volatility of mobility Requires Legislation on
schemes (Europe) raw materials intensive R&D chemical
spending substances
- + - + - + - + - + - +

2.1. Overview of the market
During the global recession, the results of 8 out of the top 10 companies showed
An upbeat business environment
a double digit drop. However, by mid 2010 the tyre market is on the rise again, a
trend that will continue for the years ahead.
Of course, there have been regional variations in the rise and fall of local tyre
markets - with China bouncing back much faster than other economies.
… backed by growing demand in
Although China experienced a downturn in 2008, it ended up with a 20% growth
emerging markets
in 2009, while other regions were still in recession. Emerging markets will drive
industry sales in the years to come.
To date, there are nearly 800 million vehicles on the road worldwide, a figure
…and meeting with increased mobility
that is likely to double by 2030. In both mature and emerging markets, the road
needs
transport sector is faced with increasingly demanding requirements that call for
higher tyre performance standards.
The development of road infrastructure in developing economies is driving a

… enhanced by road infrastructure faster shift from bias to radial tyres, which is the case in the Indian truck tyre
improvement in developing economies market, for example. Radial tyres offer enhanced durability and fuel economy
compared to bias tyres, and higher margins for tyre manufacturers.
Tyre manufacturing is a capital-intensive industry with long investment payback

… more than ever, companies with
periods. Added to this, the pace of technological innovation is slow. However,
technological edge will secure higher
profits
there are higher margins from selling differentiated products as the tyre has
become a focus for OEMs (original equipment manufacturers).

2.1. Overview of the market
Most of the components used in tyre manufacturing are synthetic and obtained
Nonetheless, from crude oil - and this situation is not likely to change, although the quest for
the price of raw material decides the natural alternatives continues. With increases in oil and natural rubber prices, a
margins growing number of tyre manufacturing companies will try to shift to these types
of alternative materials.
Raw materials such as oil, which is used to make synthetic rubber, and other
non-renewable raw materials are becoming increasingly scarce and will remain
… and securing raw material can be
expensive in the years ahead, notably due to strong demand from China and
problematic
other emerging markets. With the new demand, there will be a frantic need to
replenish inventories.
Specialised tyres are likely to become more commonplace - with consumers in

… the cost of R&D is elevated
mature economies choosing to spend more money on products with specific
attributes.
It is estimated that one billion tyres reach the end of their lives every year, on a
global scale. Minimising the environmental impact of end-of-life tyres (ELTs)
… managing end-of-life tyres is
will remain a high priority goal of the tyre industry. Various efforts by public
essential
authorities and the tyre industry are currently underway to address the issue of
ELTs.
Road transport accounts for 18% of all fossil-based CO2 emissions due to
human activity, with tyres representing 4% from the fuel used to overcome their
…complying with environmental
rolling resistance. Producing tyres which limit green house gas emissions is
regulation is challenging
essential in complying with ongoing legislation, considering that the tyre-
labelling system becomes mandatory in 2012.

2.2. Supply Raw materials
Production of both natural and synthetic rubber is concentrated in Asia

Total production of rubber (natural and synthetic) Rubber production by type and region
unit: % of total tonnage unit: mn tons
North Asia/ Oceania

America
9%
Europe
Latin America
Asia/ Oceania 4%
71%
North America Natural Synthetic
European Lat in America

Union
14%
Africa
Africa
2%
0 5 10 15 20
Source: International Rubber Study Group, 2009 data. Source: International Rubber Study Group, 2009 data.
Asia is the world’s leading supplier of both natural and synthetic rubber, with a 71% share of the world rubber production, but also
the largest consumer (industry growth in China and India has triggered higher demand for rubber). It is followed by the European
Union with 14% and North America with 9%.
Thailand, Indonesia and Malaysia retain over 70% of the global natural rubber reserves and rubber production facilities are
concentrated in these countries.
Brazil is also a small-scale producer of natural rubber where Michelin runs a large plantation facility.
Europe and North America hold a significant role in production synthetic rubber, but they don’t posses any natural rubber resources.

2.2. Supply Production and exports
China exports roughly half of its tyre production

Tyre production and exports
unit: million tyres
Production Exports
250
China is the leading tyre producing
country in the world, with exports
amounting to 235 million tyres
(according to latest available data), an 200
equivalent of €8 million. The past 4
years, Chinese producers’ annual
capacity increased from 93.2 million
tyres to 235.2 million tyres, with a 53.8 150
million increase in tyre capacity taking
place between 2006 and 2007 alone.
Similarly, exports expanded at a
skyrocketing pace and this trend is 100
likely to continue.
Exports by U.S. producers, as a share

of total shipments, increased from 12.3 50
percent in 2004 to 14.1 percent in 2008.
0
China Japan USA
Source: Xerfi Global with CHELEM, latest available data.

2.2. Supply Raw material prices
Raw material prices are volatile, impacting profitability

Prices for main raw materials – main trading indexes
unit: % change
Natural rubber Synthetic rubber Crude oil Butadiene

The sharp pricing volatility for natural
rubber and petroleum-based materials 120%
100%
Tyre production is the biggest
80%
consumer of synthetic and natural
rubber. The industry uses the majority 60%
of natural and synthetic rubber output.
On the supply side, the synthetic 40%
rubber industry is being clutched by
high petroleum costs and butadiene, 20%
the tyre industry's major chemical raw
0%
material used for producing synthetic
rubber, is not easily available. -20%
High raw material prices impact the
competitiveness of the tyre industry -40%
and securing raw materials will remain
a critical issue in the tyre industry for -60%
the years ahead.
-80%
2008 2009 2010
Source: Xerfi Global. Primary source: International Rubber Study Group.

2.2. Supply Production prices
Operational efficiency is key to staying competitive

Tyre production prices
unit: % ( quarterly change)
15% United States European Monetary Union

Prices are the most important factor in
successfully competing for the sale of
tyres.
The pricing volatility for natural 10%
rubber and petroleum-based materials
Increasing costs for raw material 5%
supplies amplify companies’
production prices and affect its
margins if they are unable to pass the
higher production costs on to 0%
customers in the form of price
increases.
The milder change in production prices
in the European Union can be -5%
explained by a stronger euro offsetting
input prices (as opposed to a weaker
dollar in the United States).
-10%
2000 2002 2004 2006 2008 2010
Source: Xerfi Global. Primary source: Fed, Eurostat.

2.3. Demand Automobile production
Changes in tyre production are correlated to automotive industry output

World vehicle production Tyre and motor vehicle production volumes – United States
unit: change in % unit:% (annual change)
10% Motor vehicles Tyres

70%
5%
0% 50%
-5%
30%
-10%
-15% 10%
-20% -10%
-25%
-30%
-30%
-35% -50%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-
2015 -70%
CAGR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Xerfi Global with JATMA. Source: Xerfi Global. Primary source: Federal Reserve Board.
Global economy growth and expanding production in the automotive industry drive tyre production growth.
During the recent global recession, automobile production was down by over 30% and this led to a subsequent decrease in tyre
production levels.
While having been less affected by significantly lower economic activity in the sector, the newly developing countries remain markets
with remarkable growth potential for the automotive sector and consequently for the tyre industry.

2.3. Demand Global vehicle fleet
The tyre industry will benefit from the expansion in the global vehicle fleet
Projected number of vehicles on the road
unit: mn vehicles
3,000
With over 90 percent of the growth Light vehicles Heavy vehicles

derived from emerging economies
countries, the world vehicle fleet is 2,500
expected to triple by 2050 from the
current level. In terms of road
transport, more miles will be driven by
2,000
more vehicles, so the tyre industry can
take full advantage.
Both the number of vehicles and the 1,500

amount of travel are set to increase
substantially during the next few
decades. Overall, activity involving
heavy vehicles is expected to increase 1,000
more than activity involving light
vehicles, thus triggering increased
demand in commercial vehicle tyres
which ensure higher margins for 500
manufacturers.
0
1990 2010 2030 2050
Source: Xerfi Global. Primary source: OECD.

2.3. Demand Online retailing
Internet sales are booming and will continue to do so

Tyres sold via the internet-Germany
Units: % of total sales
8%
Customers are becoming increasingly
sensitive to prices when making a tyre
purchase. This could explain the boom of
tyre sales on the internet. Customers can
truly take advantage of modern e-
commerce: convenience in order placing, 6%
quick, efficient delivery, cost information
(sites offer cost comparisons) and, last but
not least, low prices (15% to 20% cheaper).
Delticom, Europe’s largest online tyre 4%

retailer delivers tyres in two business days
to any address/ professional fitting shop the
customer chooses. Its sales were up 20% in
2009 from the previous year, and they are
expected to keep growing at a similar pace.
In France and Germany, online tyre 2%
retailing accounts for 7% of total
replacement sales, and will achieve more
significant proportions over the next few
years.
0%
2004 2005 2006 2007 2008 2009
Source: Xerfi Global. Primary source: ADAC.

2.4. International Trade Exports
Asia is by far the largest tyre exporter

Tyre exports between geographical regions
(Values over 1 bn USD - the width of the arrow is proportional to the value of exports)
NORTH
AMERIC EUROP
E
ASIA/
OCEANIA
AFRIC
A
LATIN MIDDL
AMERI
Source: Xerfi Global. Primary source: CHELEM.

2.4. International Trade Ranking
China has overtaken Japan to become the world’s largest tyre exporter
Tyre largest exporters in 2000 Tyre largest exporters in 2008
unit: mn USD unit: mn USD
Japan China
United States Japan
France Germany
Germany France
South Korea United States
Canada South Korea
Spain Belgium Luxemburg
Italy Spain
China Slovakia
Great Britain Thailand
Belgium Luxemburg Italy
0 1,000 2,000 3,000 4,000 0 2,000 4,000 6,000 8,000 10,000
Source: Xerfi Global. Primary source: CHELEM Source: Xerfi Global. Primary source: CHELEM
The world’s largest tyre exporting countries’ ranking in 2008 reinforces the emergence of China as a leading global economic power:
in less than 10 years, China has become the number one tyre exporter in the world (from the 9th position occupied in 2000).
Since the Obama administration slapped antidumping duties on China-made tyres on September 26th, 2009, China's tyre exports to
the United States have tumbled. In October 2009, China's tyre exports to the U.S. dropped 37.5 percent year-on-year to $130 mn. The
figure was a record low from the preceding 44 months. China-made passenger vehicle and light truck tyres imported into the U.S.
were subjected to an additional 35 percent import duty for the duration of a year. The duty would be then lowered to 30 percent in its
second year and 25 percent in its third year.

2.5. Regional overview Trends 2010-2015
Emerging markets are poised for substantial growth

Production and demand trends in main geographical regions
Vehicles
Vehicle Type of per 1,000 Breakdown Demand trends
production tyre inhabitant of tyre sales 2010-2015
s
Passenger cars : Passenger car tyres :
ASIA 25.4 mn Radial: 52%
54
305 mn
Commercial vehicles : Bias: 48% Commercial vehicle tyres :
PACIFIC 5.1 mn 67 mn
Passenger cars : Passenger car tyres :
NORTH 4mn Radial: 96%
750
325 mn
Commercial vehicles: Bias: 4% Commercial vehicle tyres :
AMERICA 4.6 mn 23 mn
Passenger cars : Passenger car tyres:
LATIN 2.9 mn Radial: 65%
120
70 mn
Commercial vehicles : Bias: 35% Commercial vehicle tyres: 15
AMERICA 0.6 mn mn
Passenger cars : 550 (Western Passenger car tyres :
15.1 mn Radial:79 % Europe) 368 mn
EUROPE Commercial vehicles : Bias: 21% 180 (Eastern Commercial vehicle tyres :
0.4 mn Europe) 16 mn
AFRICA
Passenger cars: Passenger car tyres :
AND 12 mn Radial: 72% 80 mn
45
Commercial vehicles: Bias: 28% Commercial vehicle tyres:
MIDDLE 0.3 mn 16mn
EAST

3. Corporate strategies and
competition

3.1. Competitive environment Driving forces of the industry
The tyre industry: a highly competitive environment

Competitive forces of the tyre industry
In the emerging markets industry

Competitive 2010 leaders will face intense competition
Rivalry 2015 from domestic players.
Top players in the industry are likely

Suppliers
to forge alliances with local tyre
manufacturers in developing countries.
In mature markets, buyers are more

Customers
sensitive to brand image and product
differentiation
Substitutes There are no actual substitutes to

tyres.
New entrants
Barriers to entry are high as the tyre
industry is capital-intensive.
0 1 2 3 4 5

3.1. Competitive environment
‘The Big Three’ acquisitions and aggressive pricing strategy are geared towards raising
market shares and profits. In these conditions, smaller manufacturers encounter further
Competitive rivalry
difficulties in generating profit margins. To compete with the leaders, smaller
manufacturers tend to focus on a specific niche (high performance or premium tyres) or
in regional markets, a trend that will continue to shape the industry environment.
Barriers to entry such as the influence of brand loyalty or brand-building expenditures,

capital requirements related to building or modernizing manufacturing facilities, and
New entrants
maintaining highly advanced research and development facilities will become more and
more encumbering as the industry faces further consolidation.
There are no real substitutes for tyres, but consumers can choose with respect to
replacement tyres and that can affect the demand for specific types of tyres. They have
a choice to purchase new or used tyres, high-performance tyres or have their tyres
Substitutes retreaded. The demand for a specific type of tyre is elastic and more dependent on
price. More explicitly, higher prices for new tyres determine consumers to postpone
replacing worn tyres or to purchase used or retreaded tyres. Car tyres can be retreaded
once but truck tyres can be retreaded several times.

Natural rubber’s physical properties make it irreplaceable in some market segments

such as truck tyres. Although natural rubber is a renewable resource, its sharp
fluctuations in prices could pose a threat to long-term supply.
Generally, procurement of natural rubber and petroleum is managed through multiple
arrangements, make use of the spot or the forward market. For other major raw
materials, possible combinations include supply agreements that entail formula-based
pricing according to commodity indices, multi-year agreements or spot purchases.
To ensure continuing supplies for operations and mitigate the risk of potential supply
disruptions, tyre makers acquire raw materials from various sources around the world.
Suppliers
They have purchasing offices in Southeast Asian rubber producing countries in order to
acquire natural rubber from producers. Top-line companies such as Michelin, own
several rubber production facilities. This enables them to work directly with producers
to constantly improve quality and to reduce the costs of materials or transactions.
Falling in line with increasing demand, companies sometimes prepurchased significant
amounts of raw materials, particularly natural rubber.
The rising demand for rubber (especially from emerging markets such as China) and
price fluctuations make raw material procurement one of the industry top priorities in
the years ahead.
Customers in developed nations are becoming increasingly attracted by performance

products offering tread longevity, reduced rolling resistance, improved handling,
Customers durability, and safety. As technological progress speeds up, buyers will value more
these characteristics of tyres. In emerging markets, consumer expectations will remain
more related to prices than to any ecological attributes a tyre may present.

3.1. Competitive environment Global market share
New players have been eating into the Big Three’s market share
Change in market share of the global players
unit: %
Mi chel i n Goodyear Bri dgestone Others
For most of the history of the tyre 100%

industry, the top three leaders have
remained unchanged, with Bridgestone 90%
and Michelin battling for first position.
The results for fiscal 2009 and the first 80% 43%
half of 2010 also confirm Bridgestone’s 54%
supremacy in the industry. 70%
Although in 2000 the ‘Big Three’ held
almost 60% of the whole market share, 60%
this proportion has gradually declined
over the last decade, reaching 46% in
50%
2008. This trend is likely to continue,
as smaller players competing on
40%
volume and low-pricing strategies keep
on increasing their market shares. Such
30%
is the case of emerging countries,
especially China, where domestic tyre
manufacturers have doubled their sales 20%
both in volume and value over the past
decade, and this development is set to 10%
continue.
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Xerfi Global. Primary source: Bridgestone.

3.1. Competitive environment Small-scale players
For instance, in China, domestic makers are increasing their market share
Domestic tyre manufacturers in China
unit: million euros
According to the China Association of Company Net sales 2006 Net sales 2009 % change
Automobile Manufacturers (CAAM),
the Chinese automotive market is
heading for “stable growth", predicted
to be at 16% for the years to come. Hangzhou Zhongce 703.4 1,747.7 148.5%
That's the market's average annual
growth rate in the 15 years before 2008.
Under these circumstances, tyre
demand is increasing. But international Triangle Group 825.4 1,325.7 60.6%
players will have to face stiffer
competition from domestic
manufacturers, who have seen their
market share rise constantly over the GITI Tyre 439.5 1,241.7 182.5%
past years.
In line with growing tyre demand,
major tyre companies have announced
production capacity expansion plans: Shandong Linglong 365.3 1,236.7 238.5%
Sumitomo Rubber Industries Ltd. plans
to build its second tyre plant in China
to meet rising demand for radial tyres. Aeolus Tyre 323.8 580.6 79.3%
Source: Xerfi Global. Primary source: tyre press.

3.2. Business models Diversification
Most groups are focused on their core business…

Tyre operations of diversified groups
unit: mn euros, % of net sales
The process of manufacturing tyres is Goodyear Michelin

Cooper
complex and capital intensive. Groups 100%
Sumit omo
such as Goodyear, Michelin or Cooper
are exclusively dedicated to their core 90% Pirelli
business: tyres. Over 80%
80% specialization
A second category includes companies Hankook
Bridgest one
that manufacture other rubber goods 70%
Tyre share in net sales

except tyres, such as Yokohama and
60%
Bridgestone, on the one hand, or
companies that operate in completely 50%
different market, such as Pirelli who
40% Cont inent al
owns real estate subsidiary.
Continental is a special case: the group 30%
is a first-line supplier of parts for the
automotive industry (interior, power 20%
trains etc.). 10%
A company’s facilities are generally
specialised by tyre product (passenger 0%
car or tuck) and by type of tyre (bias 0 3,000 6,000 9,000 12,000 15,000 18,000
or radial) produced. Tyre operations net sales
Source: Xerfi Global. Primary source: annual reports.

3.2. Business models
…and leaders are present in every market segment

Market presence of leading tyre manufacturers
Types of tyre
Company Passenger car Heavy truck Off-the-road Civil Agricultura
Two-wheel Aircraft
and light truck and bus vehicle engineering l
Bridgestone       
Michelin       
Goodyear       
Continental  
Sumitomo    
Pirelli   
Yokohama  
Hankook  
Cooper  
There are two different types of tyre: bias-ply constructed tyres or radial constructed tyres. Radial tyre construction allow more tread
contact with the road surface (providing increased safety) and also present less forward rolling resistance, thus improving fuel
economy. Radial tyres have a longer lifespan than bias-ply tyres, and the transition from bias to radial tyres, which began in the mid
‘70s, has been a factor in reducing growth of domestic demand for replacement tyres.
Most tyre production in the developed countries (North America, Western Europe, Japan) is of radial tyres: nearly all car tyres for
original equipment manufacturers and over 80% of truck and bus tyres are radial. In emerging economies, the radial-tyre proportion
does not exceed 60%.

3.2. Business models Strategic alliances
Leading players are looking to increase the value of their products

Partnerships and alliances in the tyre industry
WITH RETAIL CHAINS AND WITH CARMAKERS
TYRE DEALERS
The global rubber tyre manufacturing In the premium segment,
industry is fairly concentrated, dominated Michelin with the fifth largest Hankook struck deals with
by large multinationals. independent truck tyre dealer Snider Porsche , Audi A4, Daimler E-
Tyre Co. Class, Volvo XC60, Aston
Competition in the industry is based on Martin, BMW, Bentley
factors such as the influence of brand TECHNOLOGICAL
loyalty, capital requirements related to WITH OTHER TYRE COMPANIES
PARTNERSHIPS
building or modernizing manufacturing
Sumitomo and Goodyear: joint PARTNERSHI
facilities, and maintaining highly advanced Pirelli with Brembo and
ventures for production and sales
research and development facilities in order activities in Europe and North PS AND Magneti Marelli for the Cyber
to secure innovations that are increasingly ALLIANCES Tyre
America.
important to customers: in the original Pirelli runs a joint research
Cooper and Kumho
equipment market tyre makers compete to laboratory with Politecnico
University of Turin
secure contracts, while in the replacement
segment consumers have multiple choices.
WITH STRATEGIC SUPPLIERS
This is leading to an increasing number of MARKETING
strategic alliances and partnerships intra Michelin in South America has a PARTNERSHIPS
and extra-industry. technical
assistance partnership, Pirelli becoming official
Michelin supports 52,000 hectares of sponsor of the Formula 1
natural rubber plantations. starting 2011

3.2. Business models Vertical integration
Most tyre companies are vertically integrated

Vertical integration of tyre companies
Rubber tyre manufacturing companies tend

to be highly vertically integrated. There is a
growing trend in the industry to own rubber Raw material suppliers
plantations because it creates a strong
competitive advantage. Michelin for
instance, owns and operates six rubber
plantations (one located in Latin America
and the others in West Africa and Asia),
while Goodyear Tyre and Rubber Company
has recently invested in two new synthetic
rubber plants. Tyre production facilities
Further down the line, many tyre
companies own and operate their own
distribution systems: Cooper has five
distribution centres and five sales offices in
Europe and Michelin has two integrated
tyre Distribution and Service networks,
Euromaster and TCI. The Korean Regional
Headquarters of Hankook operates over
Distribution networks
2,100 direct-run and franchised dealerships.
Source: Xerfi Global

3.3. Geographical presence Presence on the main geographic markets
Industry leaders are still mainly focused on their domestic market…

Geographical presence of companies
key: +++ = predominant presence in the region; ++ = important presence; + marginal presence
Geographic market
Company Country
Europe North America Latin America Asia-Pacific Africa Middle East
Bridgestone
++ ++ ++ ++ ++
Michelin
++ ++ ++ ++ +
Goodyear
++ ++ + ++ +
Continental
++ + + + +
Sumitomo
+ + + ++ +
Pirelli
++ + ++ + +
Yokohama
+ + ++ + +
Hankook
+ + ++ ++ +
Cooper
++ ++ + +
Source: Xerfi Global with companies’ annual reports and web sites

3.3. Geographical presence Operations in emerging markets
…and are planning to expand their presence in emerging markets

Bridgestone is set to invest $540 mn between 2010 and 2013 to build a car and truck
tyre plant near Pune, India, to support growing demand for radial tyres in Asia and an
additional $142 mn over two years to expand capacity for passenger tyres at its plant in
Poznan, Poland, by nearly a third.
One of the industry leaders, Michelin, plans to invest $870 mn to build a truck and off-
the-road tyre plant in Tiruvallur, near Channai in southern India in the ucoming years.
Sumitomo is another major player with an eye on the Chinese tyre market: it will spend
$297 mn to build a passenger tyre plant in Changsha, China, with production expected
to start by July 2012.
The Pirelli Group intends to reinforce its presence and to invest more in Brazil. The
300 mn US dollars of total investments in the 2008-2011 period are destined one third
for research and development and the remainder for increasing the production capacity.
The new investments will enable a 20% increase in car and motorcycle tyre production.
Pirelli aims to increase tyre production in eastern Europe, namely at its factory in
Slatina, Romania: the €250 mn investment is to be carried out between 2009 and 2011.
Enjoying rapidly increasing demand, Hankook is completing a plant expansion project

in Hungary, which is scheduled to start operations in 2011, when annual output will
total 10 mn units (from 5 mn currently). Another project to build a new plant capable of
producing five mn tyres a year by 2013 is seriously being considered.

3.4. Brand strategy Multi-brand versus single-brand
Multi-brand strategies are dominant among global leaders

Tyre brands of global leaders.
Company Brands
Brand loyalty is revealed when car
owners replace tyres on their cars with Bridgestone Ecopia, Firestone
the same brand as that originally
installed. As a result, tyre
manufacturers attempt to obtain Michelin BF Goodrich, Kleber, Uniroyal , Warrior
original equipment contracts. Original
equipment contracts are also attractive
Goodyear Kelly, Fulda
to tyre companies because they reduce
distribution expenses and advertising
costs. Continental Continental, General Tyre, Uniroyal, Barum
Most tyre groups pursue a multi-brand
strategy. This strategy allows them to Sumitomo Dunlop, Falkon
be present on different market
segments. Companies develop global
brands or regional brands; for instance, Pirelli Pirelli
Michelin sells Kleber tyres only in
Europe, Uniroyal in North America and Yokohama Advan
Warrior tyres in China.
Among the world leaders, only Pirelli Hankook Ventus, Smart
has implemented a single brand
strategy.
Cooper Cooper, Discoverer, Roadmaster, Mastercraft
Source: Xerfi Global with companies’ annual reports and web sites.

3.5. Differentiation strategies Case studies
Cooper: emphasises high quality tyres for the replacement market

U.S. Light Vehicle – replacement tyre market
unit: %
A different strategy for competing in the

tyre industry is illustrated by one relatively
small firm in the sector. Cooper Tire of
Findlay, Ohio, emphasises high quality
tyres aimed at the replacement market in
North America (no original equipment),
where it holds a 13 percent market share,
according to the company’s 2009 releases. Others Cooper
87% 13%
The success of the company is largely
explained by its cooperation with about
1,700 independent dealers rather than using
a chain of company-owned stores for
selling its tyres. Cooper encourages long
term relationships with each dealer rather
than cultivating transaction-based rapports.
Cooper has shown resilience despite the

crisis, and together with Hankook, it is the
only company that in 2009 secured margins
even higher than in 2005-2008 (see
annexes).
Source: Xerfi Global. Primary source: Cooper annual reports.

3.5. Differentiation strategies
Hankook: more than 70% of its sales are made abroad

Growth rates in the tyre industry
unit: % of change
2005-2008 2009
Another successful story in the tyre industry is
Hankook of South Korea, a company that has Hankook
not only survived the crisis, but managed 15%
growth in 2009. This has strengthened its
Cooper
position as the world’s eight-largest tyre
manufacturer and laid the groundwork for a
further rise. Yokohama
Hankook has followed a four-part strategy:
increased capacity, "product renovation," Michelin
improved overseas distribution, and
reinforcement of sales and R&D efforts.
With five large-scale factories in three countries Sumitomo
(Korea, China and Hungary), about 70% of its
total sales come from overseas. The company Goodyear
focuses on boosting sales in Korea (its home
market) and China (its second largest market)
where distribution channels exclusively handling Continental
Hankook products were reorganised to expand
the sales of premium tyres.
The company has strengthened brand value by Bridgestone
introducing diverse new products and engaging
in aggressive marketing activities. -30% -20% -10% 0% 10% 20% 30%

Michelin: securing rubber is at the core of its strategy

SWOT analysis of Michelin
STRENGTHS
Michelin takes vertical integration to a Global brand recognition WEAKNESSES
new level: while natural rubber is subject Trend-setter in innovation
to sharp price fluctuations and rising Natural rubber suppliers Weaker presence in the
demand, developing and maintaining and distribution system emerging markets
rubber tree farms is a major priority for integration
Michelin, which uses nearly 10% of the
world’s natural rubber output.
Michelin is directly involved in the
production of natural rubber through its
three latex processing units in Brazil and
its 20% stake in SIPH (Société
Internationale de Plantations d’Hévéas), MICHELIN
which operates rubber plantations in West
Africa (Nigeria, Cote d’Ivoire, Ghana and
Benin).
Michelin remains the trend-setter in terms
of industry innovation. This positioning,
combined with a strong presence on global
OPPORTUNITIE THREATS
markets, brand recognition and integrated S Financial performance
operations, is translated into elevated Presence in every dependent on the state of
operational margins (10%) and global geographical region the economy (change in
leadership in the high performance Strong growth in the raw material prices,
segments. emerging economies exchange rates)
Better economic outlook Bridgestone’s aggressive
in mature economies strategy in Europe

3.6. Outlook Investments
From cutting back on investment, to an infusion of capital planned for the years to come
Investments planned by tyre manufacturers for the period between 2010 and 2013
( Plans to boost capacity;  Plans to build new plant)
Bridgestone     
Cooper 
Michelin  
Goodyear 
Pirelli   
Yokohama  
JK Tyre

(India)
Nexen (S

Korea)
Cheng Shin 
Double
Coin 
(China)
Hankook  
Continental  
Sumitomo 
Toyo 
United Indonesi
Brazil Poland Romania Hungary Russia Thailand India China Korea Japan
States a

3.7. Ranking Net sales
All companies but Hankook recorded lower sales in 2009 compared to 2008
Net sales
unit: million euros
Goodyear
Bridgestone
Michelin
Continental
2008
Pirelli
2009
Sumitomo
Yokohama
Hankook
Cooper
0 5,000 10,000 15,000 20,000 25,000 30,000

3.7. Ranking Ranking by operating margins
Continental and the Japanese tyre manufacturers have the highest margins
Groups’ operating margins from tyre operations in 2009
unit: %
Continental
Bridgestone
Yokohama
Sumitomo
Hankook
Michelin
Pirelli
Cooper
Goodyear
0% 2% 4% 6% 8% 10% 12% 14% 16%

4. Company profiles

4.1. Bridgestone Company Overview
Bridgestone
Net sales 2009: 19.7 bn euros
Tyre Business Diversified Products Business

83 % of sales 17% of sales
Fiscal year ended March, 31st 2010

Headquarters Tokyo, Japan
Key figures The roots of the Bridgestone Group date back to the establishment of Bridgestone
Tyre Co., Ltd. in 1931. Founder Shojiro Ishibashi used an English translation of his
surname to name the company.
Net consolidated sales €19.7 billion
Tyres account for about 80% of Bridgestone Group sales. Besides a wide variety of
Operating income €577 million tyres, Bridgestone also expanded its operations into chemical and industrial
products, sporting goods and bicycles, supply tyres for trucks and buses,
Net consolidated profit €7.6 million construction machinery and mining.
The Bridgestone Group sells its products in more than 150 countries around the
Staff 137,135 world and employs over 137,000 people.
International presence Japan 26.2% of net sales

The Americas 43.3% of net sales
Europe 13.9% of net sales
Others 16.7% of net sales

4.1. Bridgestone Business segments
MAIN
% OF OPERATIN
SEGMENT OPERATIONS CUSTOMER
SALES G MARGIN
S
Tyres: tyres and tyre tubes for passenger cars, trucks, buses,
construction and mining vehicles, industrial machinery,
Consumers and
TYRE BUSINESS 82.8% 3.5% agricultural machinery, aircraft, and motorcycles, retreading
companies
materials and services, automotive maintenance and repair
services, tyre raw materials, and others.
Chemical and Industrial products: Vehicle parts,

polyurethane foam and related products, electronic precision
parts, industrial materials-related products, civil engineering
DIVERSIFIED and construction materials and equipment, and other. Consumers and
17.2% 0.1%
PRODUCTS Sporting goods: Golf balls, golf clubs, other sporting goods, companies
and other.
Bicycles: Bicycles, bicycle-related goods, and other.
Other: Finance, and other.
Source: Xerfi Global with Bridgestone.

4.1. Bridgestone Corporate strategy
2009 was a challenging year for the world’s leading tyre manufacturer, who saw its profit drop
by 19.7%. To enhance its competitiveness and operational efficiency, Bridgestone aims to
Improved operational efficiency consolidate production at manufacturing sites that are the most competitive. In this view, one
restructuring measure taken was the closing of Bridgestone Australia Ltd.’s Adelaide Plant and
Bridgestone New Zealand Ltd.’s Christchurch Plant.
In the mature markets of developed countries, where there is little anticipation for steady
Focus on environmentally friendly growth, consumers are shifting their preferences to environmentally friendly products and
products in mature markets services. In line with this trend, the company has introduced enhanced environmentally friendly
products such as ECOPIA brand tyres in Europe and North America. In the same regions,
where retread businesses for buses and trucks accounts for roughly half of the tyre demand, the
company intends to expand its retread tyre operations.
In developing countries with anticipated economic development, Bridgestone has announced its
decision to:
- invest in increased production at its passenger tyre plant in Wuxi, China, in April 2009.
Expanding manufacturing sites in strong
- start production of truck and bus radial tyres in India, where demand for these tyres will likely
growth potential markets increase as the country’s expressway network and as higher-performance trucks become more
prevalent.
- open a retread materials plant in Thailand in order to respond to the strong growth in the Asia
market, in July 2009.
Since the demand for ultra-large off-the-road radial tyres (specialty tyres) for construction and
mining vehicles remains strong, Bridgestone plans to increase its production capacity in this
segment by about 30% compared to 2009 levels

4.1. Bridgestone Recent events
Date Event
January 2009 Bridgestone Americas Tyre Operations announced the suspension of passenger and light truck tyre manufacturing
at the LaVergne Plant in LaVergne, Tennessee (United States).
February 2009 Bridgestone started operations at its retread learning centre in Kodaira, Tokyo. Retreading prolongs the life of
tyres and is applicable for large-size tyres such as trucks, aviation etc.
April 2009 Bridgestone announced an increase in radial passenger tyre production capacity at its Wuxi Plant in Jiangsu
Province, China, in line with growing market demand.
May 2009 With the intention to set foothold into emerging European markets, Bridgestone officially opened its truck and
bus tyre plant in Stargard, Poland.
June 2009 Bridgestone started production at its Kitakyushu Plant (where it manufactures large and ultra-large tyres): the
production capacity expansion project was finished 3 months ahead of schedule.
July 2009 Bridgestone announced it will build a plant for retread materials in Thailand: the retread business is mature in
both Europe and the United States for use on trucks and buses and rapidly growing in emerging markets.
October 2009 Bridgestone announced that its aircraft radial tyres will be supplied as standard equipment on the Airbus A350
XWB.
Bridgestone Australia announced the restructure of its operations: operations in Australia are no longer viable due
to increasingly difficult market conditions.
November 2009 Bridgestone announced it would cease supplying tyres to the FIA Formula One World Championship.
December 2009 Bridgestone announced that the Toyota Sienna would be the first vehicle to fit the third generation of runflat tyres
as standard equipment.
January 2010 Bridgestone will produce truck and bus radial tyres at Indore, India plant: in India, demand for truck tyres is
expected to keep growing due to the expansion of the expressways and road infrastructure as a result of economic
growth in the nation as well as the introduction of higher-performance trucks.
March 2010 Bridgestone will establish new plant in India: the plant will begin passenger car radial tyre and truck and bus
radial tyre production in response to increasing demand in these segments in India.
May 2010 Bridgestone announces the expansion of Karawang tyre plant in Indonesia: the Karawang plant is already
undergoing an expansion project which started in August 2007 to increase its daily production capacity by 8,400
units. However, with global demand expected to continue growing, the Bridgestone Group determined that
further expansion of the plant is necessary to meet market demands.
Source: Xerfi Global. Primary source: business press

4.1. Bridgestone Key data
Bridgestone’s net sales Bridgestone’s tyre sales

unit: mn euros; annual % change unit: mn euros
27,000 20% 25,000
10% 20,000
24,000
0% 15,000
21,000
-10% 10,000
18,000
-20% 5,000
15,000 -30% 0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Bridgestone annual reports. Source: Bridgestone annual reports.
Chart 1: Chart 2:
The decline in global automotive production and sluggish The slump in demand in the automotive industry affected results
demand in the replacement market sent sales down to €19.7 bn, a of tyre companies who make approximately 25% of sales in the
19.7% decrease from fiscal 2008, partially impacted by a original equipment market, Bridgestone being no exception. Its
stronger Japanese yen. After having peaked at €25.8 bn in 2007, tyre sales were down 18% compared to the previous year, a
the group’s revenues fell by 4.6% in 2008 and 19.7% in 2009. 21.7% decline from the pre-crisis level.

4.1. Bridgestone Revenues by business segment
Bridgestone’s revenues by segment Bridgestone’s change in revenues by segment

unit: share in % unit: annual % change in revenues
2008/ 2007 change in %

Tyres
2009/ 2008 change in %
83% Diversified
products
Diversified
products
17%
Tyre
-30% -25% -20% -15% -10% -5% 0%
Chart 1: Chart 2:
In 2009, the net sales in diversified products segment saw a

Net sales in the tyre segment totalled 16.4 bn euros, an 18% sharper fall than in the tyre segment, 27.1% versus 18%
decrease from fiscal 2008. Tyre operations account for 83% of respectively. This continued the declining trend in the 2008
the group’s revenues, or 2% more than in 2008. revenues, which dropped 4.6% for tyres and 4.4% for
Bridgestone’s diversified operations in 2007.

4.1. Bridgestone Revenues by region
Bridgestone’s revenues by region Bridgestone’s change in revenues by region

The Americas Japan

43.3%
Other
Europe United States

13.9% 2008/2007
change in %
Europe 2009/2008
change in %
Japan Other
26.2% 16.7%
-30% -20% -10% 0% 10% 20%
Chart 1: Chart 2:
Bridgestone has maintained its global leader position in the tyre The only region where Bridgestone’s sales saw an improvement
business. Almost half of the company’s revenues were generated in 2008 was Japan, but that was not the case for 2009. The group
by its American operations in 2009. Also present in Europe, reported lower sales in all regional operations, markedly a more
Bridgestone derives about one quarter of its revenues from than 20% drop in Japan and Europe. A slighter drop was noted
Japan. in emerging economies.

4.1. Bridgestone Operating margin
Bridgestone’s operating profit Bridgestone’s operating margin

unit: mn euros unit: %
2,000 10%
7.9%
6.4% 7.4%
1,500
4.1%
5%
2.9%
1,000
500 0%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Bridgestone reported declining profits for the second consecutive Bridgestone’s operating margin continued to drop from 2007,
year. With a significant impact from such factors as sharply due mainly to a sharp increase in raw material price and partly to
higher prices for raw materials, operating income decreased yen appreciation. Declining profitability has forced Bridgestone
42.5%, to 0.5 bn euros in 2009 and 47.4% in 2008. to reshuffle its operations and close down two plants in Australia
and New Zealand.

4.1. Bridgestone Research and development
Bridgestone’s R&D expenditures Bridgestone’s R&D ratio

750 4%
3,3%
700
3,0% 2,9%
2,9%
3%
650
2,6%
2%
600
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Bridgestone annual reports Source: Bridgestone annual reports
Chart 1: Chart 2:
Bridgestone spent about €650 mn for research and development Despite its declining sales, Bridgestone’s R&D ratio has stood at
in 2009, 8% less than in 2008. Nonetheless, it is important to a constant ratio of more or less 3% of net sales for the past 5
bear in mind that Bridgestone sales were down more than 40% in years. This reflects Bridgestone’s commitment to product
FY2009, which explains the decrease. innovation, an important pillar of growth in mature markets,
where innovations drive sales.

4.1. Bridgestone Statistical data
Bridgestone’s net sales Year Sales Change in %

unit: bn euros ; annual % change ; 2006 20.5 11.4%
2007 22.8 11.1%
Source: Xerfi Global with Bridgestone annual reports 2008 25.8 13.3%
2009 24.6 -4.6%
2009 19.8 -19.7%
Bridgestone’s revenues by activity Segment % of sales Change in % Change in %

unit: share in %; annual % change (2009/2008) (2008/2007)
Tyres 82.8% -18.0% -4.6%
Source: Xerfi Global with Bridgestone annual report Diversified Products 17.2% -27.1% -4.4%
Bridgestone’s revenues by region Region % of sales Change in % Change in %

Japan 26.2% -21.3% -8.1%
Source: Xerfi Global with Bridgestone annual reports The Americas 43.3% -19.9% -6.3%
Europe 13.9% -23.6% -8.0%
Others 16.7% -12.5% 12.8%
Bridgestone’s operating profit Year Change in Operating profit Operating margin

unit: annual % change; share in % 2005 8.2% 7.9%
2006 -10.8% 6.4%
Source: Xerfi Global with Bridgestone annual reports 2007 31.0% 7.4%
2008 -47.4% 4.1%
2009 -42.5% 2.9%
Bridgestone’s R&D expenses Year R&D expenses R&D ratio

2006 9.2% 2.9%
Source: Xerfi Global with Bridgestone annual reports 2007 0.1% 2.6%
2008 7.5% 2.9%
2009 -8.0% 3.3%

4.2. Michelin Company Overview
Michelin
Passenger car and light Truck tyres and related Specialty tyre businesses
truck tyres distribution
56% of sales 30 % of sales 13.7% of sales
Fiscal year ended December, 31st 2009

Headquarters Clermont-Ferrand, France
Key figures
In 1832, Aristide Barbier and Edouard Daubrée opened in Clermont-Ferrand a
factory for farming equipment and rubber items. In 1889, Edouard Michelin
Net consolidated sales € 14.8 bn became manager of the company renamed “Michelin et Cie”.
Also, Michelin holds a 35% share of the French Map and Guide market and a 73%
Operating income €862 mn share of the road map segment. The Michelin Guide is the benchmark for gourmet
dining guides with a 40% market share.
Net consolidated profit €104 mn With 72 production facilities in 19 countries, the Michelin Group sells its products
in more than 170 countries around the world and employs over 109,000 people.
Staff 109,000
International presence Europe 45.6% of net sales

North America and Mexico 33.7% of net sales
Other zones 20.7% of net sales

4.2. Michelin Business segments
% OF OPERATIN
SEGMENT OPERATIONS MAIN CUSTOMERS
SALES G MARGIN
PASSENGER CAR
Michelin covers every segment of the replacement market with a
AND LIGHT strong presence in all geographic regions, especially Europe.
TRUCK 55.9% 8.0% Consumers and
Michelin is a leader in fuel-efficient tyre technologies, its
TYRES AND flagship being the Michelin Energy™ Saver tyre. companies
RELATED
DISTRIBUTION
Tyres account for 2 to 3% of truck fleet operating expense and

TRUCK TYRES have a significant impact on fuel consumption, which can
30.4% -1.5% Consumers and
AND RELATED represent up to 30% of a truck’s operating cost.
Hence the importance of total cost of ownership, which includes companies
DISTRIBUTION tyre life, retreading and fuel consumptions.
High-technology products and solutions in every market:

• in earthmover and aircraft tyres,
• in agricultural tyres
SPECIALTY 13.7% 13.3% • in the two-wheel segment, Michelin offers motorcycle Consumers and
BUSINESSES and scooter tyres companies
The specialty businesses also include:
• Maps, guides and electronic services
• Michelin Lifestyle.
Source: Xerfi Global with Michelin.

4.2. Michelin Corporate strategy
In ten years, Michelin’s patent portfolio has almost tripled. With technology centres in
Extending technological North America, Europe and Asia, Michelin seeks to adjust its product portfolio to local
climate conditions, so as to be able to respond pro-actively to emerging needs. This
leadership
approach is visible in Asia, where research and development facilities are located in
China, Thailand and Japan.
In response to the break in its markets due to the recent economic slowdown, Michelin
has prioritised improving its organisational efficiency:
- standardising processes and components and sourcing globally in order to reduce capital
Enhancing competitiveness expenditure;
- resources are being focused on plants that are bigger or more specialised ;
- additional production capacity is being built in fast emerging markets such as China,
India and Brazil.
In the past five years, the percentage of sales generated in high growth countries has
increased to 32% from 26%.
In line with recent advance in the global marketplace, Michelin is stepping up the rate of
Investing in growth markets expansion in China, India, and Brazil to keep up with these surging markets, by
increasing production capacity, expanding its partner dealership networks, introducing
assistance services, and setting up retread plants to encourage the trucking industry to
switch to radial tyres.

4.2. Michelin Recent events
Date Event
February 2009 Michelin is supplying NASA’s next generation Lunar Rover Vehicle with specially designed tyres meant to
help lunar vehicles maintain mobility under extreme conditions over harsh terrain.
March 2009 The Michelin guide France 2009 celebrates its 100th edition.
April 2009 In response to the unprecedented drop in market demand, Michelin is set to close its North America BF
Goodrich tyre manufacturing plant in Opelika, Alabama.
July 2009 Michelin tread pressing plant in Mexico will be closed, due to overcapacity in its North American retread
operations.
Production is to be shifted to the U.S. retread plant
The first co-branded MICHELIN®/Harley-Davidson® motorcycle tyre was launched: Michelin and Harley-
Davidson have joined forces to develop the all-new MICHELIN® Scorcher™ “31” tyre, which carries both
companies’ trademarks.
October 2009 Michelin and Agco Corporation signed a cooperation agreement: Michelin and Agco, a leading agriculture
equipment company, are working together to strengthen relations especially in three areas: research and
development, marketing and supply chain.
January 2010 Michelin announces the end of tyre production at its Ota plant, Japan: despite measures taken to improve
productivity, reduce production costs and refocus on the production of complex products, the production cost
at Ota plant remains around twice as high as those of other plants serving that tyre segment.
February 2010 Michelin is the transferee of the 30% shares of Shanghai Michelin Warrior Tyre Co. Ltd: after the transaction,
the Double Coin Group will continue to grant Michelin the exclusive right to use the Warrior trademark for
its passenger car and light truck tyre businesses for two years.
March 2010 The company launches the new Michelin Alpin, its latest winter tyre, the fourth-generation Michelin Alpin.
The new tyre has been designed to fit a wide range of vehicles, from city cars and compacts to multiple
purpose vehicles (MPVs) and sedans.
Michelin Power Pure – “The Lightest Two-Compound Sport Premium” motorcycle tyre was unveiled by
Michelin.
July 2010 Michelin and Air France-KLM signed a long term contract: as a result Michelin tyres will be fitted on all
aircraft operated by the Air France-KLM group and by other airlines for which Air France and KLM provide
maintenance services.

4.2. Michelin Key data
Michelin’s net sales Michelin’s free cash flow

18,000 8% 1,500
4% 1,100
0% 700
16,000
-4% 300
-8% -100
14,000 -12% -500

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Michelin annual reports Source: Michelin annual reports
Chart 1: Chart 2:
In 2009, under the circumstances of a recessionary environment, Free cash flow reached €1,387 mn in 2009 compared to a
Michelin recorded a limited 9.8% decline in net sales (compared negative €359 mn in 2008. The improvement was driven by a
to its main rival, Bridgestone’s 19.7% drop in revenues) to €14.8 tight management of both working capital (particularly
bn. inventory) and capital expenditure, which was reduced to €672
mn from €1,271 mn in 2008.

4.2. Michelin Revenues by segment
Michelin’s revenues by segment Michelin’s change in revenues by segment

Truck tyres
30% Specialt y t yre
businesses
Truck tyres
Passenger car
and light truck
tyres
56%
Passenger car and
Specialty tyre light t ruck tyres
business
14%
-18% -13% -8% -3% 2% 7%
2009/2008 change in % 2008/ 2007 change in %
Source: Michelin annual reports. Source: Michelin annual reports.
Chart 1: Chart 2:
In 2009, it was the passenger cars and light truck tyres Net sales in the passenger car and light truck tyres segment stood
operations that contributed the most to the group’s revenues at €8,280mn for 2009, down 4.5% on 2008. The truck tyres and
(56% of net sales), ahead of truck tyres (30%) and specialty tyre related distribution segment was down 17.2%, while the
(14%) operations. specialty tyre business income declined by almost 13%.

4.2. Michelin Revenues by region
Michelin’s revenues by region Michelin’s change in revenues by region

North
America and
Mexico
Other regions
33.7%
North America
and Mexico
Europe
45.6%
Europe
Other regions
20.7%
-25% -15% -5% 5% 15%
2009/ 2008 change in % 2008/ 2007 change in %
Chart 1: Chart 2:
Europe’s largest company generated about 45.6% of its sales Michelin reported lower sales in Europe and Nafta in particular.
from its main market operations in 2009. Michelin derives about The company mentions lower sales volume and falling prices per
55% of its revenues from other regions, mostly Nafta and unit as the main contributors to the decline in sales.
emerging countries.

4.2. Michelin Operating margin
Michelin’s operating profit Michelin’s operating margin

1,700 10%
9.8%
8.8%
8.2%
1,400 8%
5.6% 5.8%
1,100 6%
800 4%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Operating income stood at €862 mn for the year 2009, compared Despite a 9.8% decline in net sales, in 2009, Michelin saw a
with €920 mn in 2008, reflecting the combined impact of: the slight improvement in operating margin before nonrecurring
steep 14.8% decline in unit sales and the underutilization of items to 5.8% from 5.6% the previous year.
production capacity.

4.2. Michelin Research and development
Michelin’s R&D expenditures Michelin’s R&D ratio

610 4%
3.6% 3.6%
3.4%
570 3.3% 3.0%
3%
530
490 2%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
One of Michelin’s strategic axes involves strengthening its Michelin’s R&D ratio stood at 3.4% in 2009, slightly lower than
technological leader position; therefore R&D expenses are the 3.6% ratio of 2005 and 2006, and at higher levels than the
essential to deliver ground-breaking innovations. Michelin peak years of the recent economic crisis.
allocates around 500 million euros to R&D each year.

4.2. Michelin Statistical data
Michelin’s net sales Year Sales Change in %

unit: bn euros ; annual % change 2005 15.5 3.6%
2006 16.3 5.1%
Source: Xerfi Global with Michelin annual reports. 2007 16.8 2.9%
2008 16.4 -2.7%
2009 14.8 -9.8%
Michelin’s revenues by activity Segment % of sales Change in % Change in %
Passenger car and light truck tyres
and related distribution
55.9% -4.5% -4.1%
Source: Xerfi Global with Michelin annual reports.
Truck tyres and related
distribution
30.4% -17.2% -3.7%
Specialty tyre businesses 13.7% -12.0% 5.5%
Michelin’s revenues by region Region % of sales Change in % Change in %
Europe 45.6% -17.2% -4.1%
Source: Xerfi Global with Michelin annual reports. North America and 33.7% -3.2% -6.5%
Mexico
Other regions 20.7% -1.0% 8.6%
Michelin’s operating profit Year Change in operating profit Operating margin

2006 -10.8% 6.4%
Source: Xerfi Global with Michelin annual reports. 2007 31.0% 7.4%
2008 -47.4% 4.1%
2009 -42.5% 2.9%
Michelin’s R&D expenses Year R&D expenses R&D ratio

2006 9.16% 2.9%
2008 7.50% 2.9%
2009 -8.03% 3.3%

4.3. Goodyear Company Overview
The Goodyear Tire & Rubber Company

Headquarters Akron, Ohio -USA
Key figures The Goodyear TIre & Rubber Company is one of the world’s leading tyre
companies, with operations in most regions of the world, founded in 1898 by 38-
year-old Frank Seiberling.
Net consolidated sales € 11.6 bn
Goodyear is the leading tyre manufacturer both in North and Latin America and
Operating income € 862 mn Europe's second largest tyre maker.
The company operates more than 57 plants in 23 countries, with marketing
Net consolidated profit €-269 mn operations stretching in almost every country around the world.
The company manufactures products for most applications, from passenger, light
truck and motorcycle tyres (more than 75% of sales) to commercial truck, off-the-
Staff 69,000
road (OTR) and aviation tyres. Additionally it runs several truck retreading centres.
International presence North American Tyre 42.8% of sales

Europe, Middle East and Africa Tyre 35.6% of sales
Latin American Tyre 11.1% of sales
Asia Pacific Tyre 10.5% of sales

4.3. Goodyear Business segments
% OF OPERATIN MAIN
SEGMENT OPERATIONS
SALES G MARGIN CUSTOMERS
World Headquarters, North American Tyre headquarters,

42.8% -4.4% Innovation Centre, racing tyres, chemicals, tyre proving Consumers and
NORTH AMERICAN TYRE grounds, global purchasing, airship operations, research and companies
development facilities
EUROPE, MIDDLE Brussels: Goodyear Dunlop Tyres Europe headquarters;

EAST AND AFRICA 35.6% -2.9% Europe, Middle East & Africa Tyre headquarters. Consumers and
TYRE Tyres, steel tyre cord, tyre molds, innovation Centre, tyre companies
proving grounds.
LATIN AMERICAN Sao Paolo: Latin American Tyre headquarters, tyres, aero
retread facility
TYRE. 11.1% 16.6% Retread materials
Tyres, tyre proving grounds
Shanghai: Asia Pacific Tyre headquarters

ASIA PACIFIC TYRE 10.5% 12.3% Consumers and
Natural rubber purchasing
Tyres, Aero retread facility companies
Source: Xerfi Global with Goodyear.

4.3. Goodyear Corporate strategy
Goodyear is one of the industry leaders with worldwide known brands. To address market
Product Leadership
challenges, the company wishes to achieve product leadership. In order to reach its targets,
Goodyear plans to build on:
the speed of the new product engine: rapidly launch products globally based on market-
backed innovation
key fuel efficient products such as Assurance FuelMax (North America) or EfficientGrip
(Europe).
The strategic decision to build the ‘Advantaged Supply Chain’ programme is instrumental to
Advantaged Supply Chain Goodyear’s competitive position. This programme is focused on specific segments of the
market, especially targeting original equipment fitments with a high potential of replacement
pull-through. The Advantaged Supply Chain programme already contributed to a reduction of
roughly € 1 billion in its 2009 inventory.
Lower Cost Structure Goodyear intends to obtain a lower cost structure by:
Achieving cost savings exceeding 1 billion dollars over the next three year period;
Increasing its low-cost production;
Raising its low-cost sourcing to more than 900 million dollars by the end of 2010;
Lowering unabsorbed fixed costs as volumes continue to recover.

4.3. Goodyear Recent events
Date
Event
February 2009 During the JP Morgan investor conference, Goodyear highlights industry challenges as a result of the
economic crisis and ensuing production cuts.
Mars 2009 Goodyear celebrated 100 years of innovation: on this occasion, Goodyear Aviation announced its Flight
Eagle product line enlargement. In this respect, Goodyear Tire & Rubber Company’s aviation business
introduces its Flight Eagle® LT (Light Turbine) tyre for the rapidly growing entry level, very light and light
jet business segments.
April 2009 Goodyear introduces its latest product, the Assurance Fuel Max tyre: it features a proprietary fuel-saving
tread compound that helps reduce energy loss as the tyre rolls, so less gas (4%) is required to keep the tyre
rolling.
Goodyear was named America’s most respected automotive company.
May 2009 Goodyear wins an important military supply contract: BAE Systems (a UK-based defence, security and
aerospace systems company) has selected the Goodyear 395/85R20 MV/T tyre as the exclusive fitment for its
FMTV (Family of Medium Tactical Vehicles), the U.S. Army’s vehicle of choice in the 2.5 to 10 ton
capacity. The contract calls for supplying approximately 100,000 tyres to be delivered through 2010.
Goodyear announces plan to discontinue consumer tyre production at French plant and it will further explore
divesting EMEA, Latin America farm tyre businesses. These actions are part of Goodyear’s strategy to reduce
high-cost manufacturing capacity globally.
June 2009 Goodyear moves to align capacity with weak industry demand: Goodyear will move its tyre plant in Union
City (USA), to a five-day, three-shift operation from continuous production to align capacity with weak
industry demand.
July 2009 Goodyear announced the closing of its Philippines tyre plant as part of a strategy to address uncompetitive
manufacturing capacity globally.
August 2009 Goodyear and NASA develop the ‘Spring Tyre’ for Moon, possibly Earth.
November 2009 Goodyear Assurance Fuel Max tyres were selected to be fitted on the 2010 Toyota Prius vehicle.
January 2010 Toyota selects Dunlop tyres for 2011 Sienna SE. The 2011 Toyota Sienna SE was conceived as a sporty
design and responsive performance vehicle.
April 2010 Kramer becomes Goodyear's president & CEO.
June 2010 Goodyear announces leadership changes in finance organization, names new vice president & treasurer.
Source: Xerfi Global. Primary source: business press.

4.3. Goodyear Key data
Goodyear’s net sales Goodyear’s capital expenditures

15,000 20% 800
700
10%
14,000 600
0% 500
13,000 400
-10% 300
12,000 200
-20%
100
11,000 -30% 0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Goodyear annual reports. Source: Goodyear annual reports.
Chart 1: Chart 2:
The impact of the global economic slowdown led to a scale-

Net sales were €11.6 bn in 2009, compared to €13.9 bn in 2008. down of investments for Goodyear. Capital expenditures were
Net sales declined due to lower tyre volume, primarily in North €535mn in 2009, compared to €752mn in 2008 and €530mn in
American Tyre and Africa Middle East and a decrease in other 2007. The increase in capital expenditures in 2008 primarily
tyre-related businesses, primarily in North American tyre’s third related to projects targeted at increasing capacity for high value-
party sales of chemical products. added tyres was scaled back in 2009 due to the recessionary
environment.

4.3. Goodyear Segment volumes
Goodyear’s volumes sold by segment Goodyear’s change in volumes sold by segment

unit: mn tyres unit: annual % change in volumes
Replacement Total
Units
77%
Original equipment
units
OEUnits Replacement Units

23%
-25% -20% -15% -10% -5% 0%
Chart 1: Chart 2:
In 2009, Goodyear managed to sell 128 mn tyres in the The decrease in worldwide tyre unit sales of 17.5 mn units, or
replacement unit business, 4.6% less than in 2008. Lower 9.5% compared to 2008, included a decrease of 11.4 mn OE
volumes were recorded for the OE unit, where the slump in the units, or 22.5%, due primarily to diminishing consumer markets
automotive industry contributed to a sharper decrease, 22.5% in North American, Europe, Africa, Middle East and to
less volume than in 2008. recessionary economic conditions resulting in lower demand.

4.3. Goodyear Revenues by region
Goodyear’s revenues by region Goodyear’s change in revenues by region

unit: share in % unit: annual % change
Europe,
Middle East Asia Pacific Tyre
and Africa
Tyre
35.6%
Latin Amer ican Tyre
Europe, Middle East

and Africa Tyre
Latin
American Tyre North American
11.1% Tyre
North
Asia Pacific -25% -15% -5% 5% 15%
American Tyre
Tyre
42.8%
10.5% 2009/ 2008 change in % 2008/2007 change in %
Chart 1: Chart 2:
Goodyear makes the most part of its sales -42.8%- in North North American Tyre unit sales in 2009 decreased 8.4 mn units
America, and is the leading tyre maker in the region. Another or 11.9% from the 2008 period, Europe, Middle East and Africa
significant proportion of its sales are made in the EMEA Tyre unit sales in 2009 decreased by 7.6 mn units or 10.3%. The
(Europe, Africa, Middle East) region, 35.6%, while sales in decline in the Asia Pacific tyre unit was partially offset by
Latin America and Asia Pacific stood at 11.1% and 10.5% in increased growth in vehicle production in China.
2009.

4.3. Goodyear Operating margin
Goodyear’s operating income Goodyear’s operating margin

1,000 8%
6.4%
800 6.3%
6%
600 4.1%
4.2%
4%
400
2.3%
200 2%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Operating income in 2009 reflected the impact of a sharp drop in Despite a steep decline in operating income, especially due to the
units of tyres sold and was below 2008 levels by more than half, contraction of sales in its main markets of N America and the
reaching €267 mn. In addition, high raw materials cost put more EMEA, Goodyear managed to maintain a 2.3% margin in 2009,
pressure on the company’s profitability. but lower than the 4.1% margin in 2008.

4.3. Goodyear Research and development
Goodyear’s R&D expenditures Goodyear’s R&D ratio

280 3%
260
2.1%
2.0% 2.0% 1.9%
240 2%
1.9%
220
200 1%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Goodyear is one of the leaders of technological innovation in the Goodyear’s R&D ratio has changed little over the past five
tyre industry, and research and development is important to years. It was maintained at around 2% of revenues in 2009 as
maintain this position. Although the R&D expenses were 7.9% well. Goodyear is a market maker in terms of innovation (it
lower than 2008 with a total of €241 mn, the R&D ratio stood at launched 79 new products in 2009-2010), together with Michelin
an unchanged rate of 2.1% of total revenues. and Bridgestone.

4.3. Goodyear Statistical data
Goodyear’s net sales Year Sales Change in % Volume

unit: bn euros ; annual % change ; million of tyres 2005 12.9 -1.4% 226.4
2006 13.4 3.6% 215
Source: Xerfi Global with Goodyear annual reports. 2007 14.0 4.8% 201.7
2008 13.9 -0.8% 184.5
2009 11.6 -16.4% 167
Goodyear’s volumes by activity Segment % of sales Change in % Change in %

Replacement Units 76.6% -4.5% -5.5%
Source: Xerfi Global with Goodyear annual reports. OE Units 22.3% -22.6% -15.7%
Total -9.5% -8.5%
Goodyear’s revenues by region Region % of sales Change in % Change in %

North American Tyre 42.8% -15.5% -6.8%
Source: Xerfi Global with Goodyear annual reports. Europe, Middle East and
35.6% -20.7% 1.4%
Africa Tyre
Latin American Tyre 11.1% -13.1% 11.5%
Asia Pacific Tyre 10.5% -6.6% 8.0%
Goodyear’s operating profit Year Operating profit Operating margin

2006 -32.5% 4.2%
Source: Xerfi Global with Goodyear annual reports. 2007 56.5% 6.3%
2008 -34.6% 4.1%
2009 -53.7% 2.3%
Goodyear’s R&D expenses Year R&D expenses R&D ratio

2006 9.1% 2.9%
2008 7.5% 2.9%
2009 -8.0% 3.3%

4.4. Continental Company Overview
Continental
€ 20 bn net sales
Automotive Group Rubber Group

60% of net sales 40% of net sales
Chassis Powertrain Interior Passenger Tyres Commercial Vehicle ContiTech

23 % of sales Tyres 5 % 12 % of sales
22 % of sales 17% of sales 21% of sales
Fiscal year ended December 31st, 2009

Headquarters Hanover, Germany
Key figures
The company was founded in 1871, in Hanover, Germany and is among the five
largest automotive suppliers in the world and the second largest in Europe.
Net consolidated sales €20 bn Acquisitions in the fields of brakes and chassis of Teves in 1998 as well as of
Temic in 2001 in the field of electronic technologies have turned Continental from
Operating income €-1,040 mn a pure rubber based manufacturer into a leading automotive technology supplier.
The company comprises a total of six divisions, developing products ranging from
Net consolidated profit €-1,606 mn brake systems to passenger car and truck tyres.
It owns nearly 190 production and R&D sites in 39 countries.
Staff 134,434
International presence Germany 29% of net sales

Rest of Europe 34% of net sales
NAFTA region 18% of net sales
Asia 14% of net sales
Other countries 5% of net sales

4.4. Continental Business segments
OPERATIN MAIN
DIVISION % OF SALES G MARGIN OPERATIONS
CUSTOMERS
It consists of the following units:
Original Equipment
Replacement Business Europe & Africa
Replacement Business, The Americas
Replacement Business, Asia Pacific
Two-Wheel Tyres
CONTINENTAL
Consumers and
PASSENGER LIGHT 23% 11.4% The division develops and manufactures tyres for compact,
TRUCK TYRES standard-size and full-size cars, vans, motorcycles and companies
bicycles.
Worldwide brands: premium Continental brand, budget

Barum brand
Regional brands: Uniroyal, Semperit, General Tyre, Viking
etc.
The truck division comprises the following units:

CONTINENTAL Truck Tyres, Europe – the market leader
5% Consumers and
COMMERCIAL -4.7% Truck Tyres, The Americas
Truck Tyres, Asia Pacific companies
VEHICLES TYRES
Industrial Tyres
The ContiTech division is one of the world’s largest

specialists in rubber and plastics technology.
CONTITECH 12% 7% It develops and produces functional parts, components, and Companies
systems for the automotive and other industries.
Source: Xerfi Global with Continental.

4.4. Continental Corporate strategy
The Continental Group aims to be at least among the top three suppliers in every market it is
Leading market positions running operations. This is a central criterion for the group in the decision on whether or not to
enter a market.
Balance of sales between the automotive Currently, around 67% of sales come from vehicle manufacturers – primarily via business in the
industry and other sectors Automotive Group.
The production of passenger cars and light and heavy trucks depends on factors such as economic
conditions, consumer spending and consumer preferences.
To cushion the negative effects of the cyclical automotive sector on business, Continental’s goal
remains to generate at least 40% of consolidated sales from outside the automotive industry,
essentially from the tyre replacement market and ContiTech’s various industries.
Continental’s strategy in the coming years involves developing new products, particularly in the
European ultra high performance segment (UHP). This portion of the tyre market is expected to
grow by more than 6% in the following years.
Taking advantage of growth opportunities Moreover, the Central and Eastern European markets, as well as expanding operations in Asia,
continue to be of long-term importance to its passenger car and light truck division.
As far as the truck tyre division is concerned, the key regions for the company’s future growth
will be the Near and Middle East as well as Russia, Asia and Latin America. The opening of a
new representative office in Dubai, as well as the cooperation agreement with an Indian partner
are, among others, actions meant to prop Continental’s growth strategy.

4.4. Continental Recent events
Date Event
May 2009 Continental started a European tour with six new premium commercial vehicle tyres launched.
Continental Tyre North America announced its cooperation with Marangoni Tread North America
May 2009 (MTNA) in The US and Canada for fleet customers. In Mexico, a total retreading business model is
underway.
Continental has acquired the remaining 34 percent of shares in Continental Matador Rubber, Puchov
(Slovakia).
Continental is now 100% shareholder of Continental Matador Rubber. This action is in line with the
group’s long-term strategy to address Eastern European markets from Puchov, Slovakia.
September 2009
Continental confirms entering the Indian truck tyre market, where around 12 mn commercial vehicle
tyres are required annually and high growth rates of around 7 percent have been forecast for the
region. Its Indian partner, Modi Tyres Company (New Delhi), produces and distributes around one
million commercial vehicle tyres each year.
Continental continues the expansion of its production capacity in its passenger car and light
commercial vehicle tyre plant in Timişoara, Romania, also leading to the creation of around 200 new
jobs.
In the next two years Continental will allocate a two digit million euro amount for this project.
November 2009 Continental announced the opening of the new Asia headquarters and R&D center in Shanghai. All of
the corporation's divisions will be represented at the headquarters under one joint roof: Continental
Automotive Systems, Continental Tyres and ContiTech. This represents a significant landmark for the
growth of Continental in the China, a market that has become crucial for all tyre manufacturing
companies.
Continental became the exclusive tyre partner and the official sponsor of 2014 FIFA World Cup in
February 2010 Brazil.
Continental announced price increases for its commercial vehicle tyres. This comes as a reaction to a
March 2010 sharp rise in the cost of raw materials since the fall of 2009 which has affected all tyre companies.
Continental holds machinery installation ceremony for its new tyre plant in Hefei, China.
July 2010 The first phase of the 185 million euro investment project was considered to be successfully
accomplished.

4.4. Continental Key data
Continental Rubber group’s net sales Continental Rubber group’s capital expenditure
6,600 450
8%
6,300 3%
300
-2%
6,000
-7%
5,700 -12% 150

2005 2006 2007 2008 2009 2007 2008 2009
Source: Continental annual reports. Source: Continental annual reports.
Chart 1: Chart 2:
Capital expenditure amounted to 4.1% of sales. Investments in

In 2009, sales in the passenger and light truck tyre division and the passenger and light truck tyres division focused on cost
the commercial vehicle tyre division amounted to €4.7 bn and reduction. Important additions were made in the commercial
€1.1 bn respectively, leading to a total of €5.8 bn. Net sales vehicle tyres division as a result of quality enhancement for
declined due to lower tyre volume sold in mature markets such truck tyre production at the plants in Puchov, Slovakia, and
as Europe, Continental’s main region. Mount Vernon, USA.

4.4. Continental Revenues by segment
Continental Tyre’s revenues by segment Continental Tyre’s revenues by segment

Passenger and
light truck
tyres Commercial
82% vehicle tyres
Passenger and
light truck tyres
Commercial -30% -25% -20% -15% -10% -5% 0% 5%

vehicle tyres
18%
Chart 1: Chart 2:
Continental makes 82% of its revenues in the passenger and light Sales in the passenger and light truck tyre division fell by 7.9%
truck tyre division and the remaining 18% in its commercial to €4,696.4 mn in 2009 compared with 2008, and by 24.1% to
vehicle tyre operations, a segment whose share of revenue has €1,065.6 mn in the Commercial Vehicle division.
been gradually declining from its 23.7% level in 2005.

4.4. Continental Revenues by region
Continental Tyre’s revenues by region Continental Tyre’s change in revenues by region

Rest of
Other Count ries
Europe
50%
Asia
NAFTA
20% NAFTA
Rest of Europe
Asi a Germany
5%
Germany Other
20%
-3% -2% -1% 0% 1% 2% 3%
Countries
5%
2009/200 8 chang e in % 20 08/2 007 cha nge in %
Chart 1: Chart 2:
The biggest share in Continental’s revenues is held by the Overall sales in Continental’s tyre business fell in Europe in line
European zone, while NAFTA comes in second with 20%. The with declines in vehicle production, but recorded a slight growth
remaining 10% of net sales are recorded in Asia and other in The Americas region in contrast to the market trend.
countries.
4.4. Continental Operating margin
Continental Tyre Divisions’ operating income Continental Tyre Divisions’ operating margin
unit: bn euros unit: %
900 15% 14,1%
820 12,8% 13,4%
740
11%
9,8%
660 8,9%
580
500 7%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Compared with 2008, the passenger and light truck tyres division In 2009, Continental tyre businesses recorded one of the highest
reported a decrease in EBIT (operating result) of €90 mn, or operating margins in the industry, thanks to the passenger and
14.4%, to €536.4 mn, while the commercial vehicle tyre division
light truck tyres division which offset the impact of the negative
reported a decrease in EBIT of €79.6 mn, or 269.8%, to €50.1
mn, an overall €565.9 mn for the tyre operations in 2009. margin in the commercial vehicle business.
4.4. Continental Research and development
Continental Tyre’s R&D expenditures Continental Tyre’s R&D ratio

170 4%
2.8%
150 3%
2.4%
2.5% 2.4% 2.4%
130 2%
110 1%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Research and development expenses increased by €3.1 mn or 2% Research and development expenses stand at 2.8% of sales, a
year-on-year to €160 mn. The greater proportion of expenses higher ratio than in previous years, when it stood at 2.4%, below
goes to the passenger tyre segment, €119.5 mn compared to €40 the ‘Big Three’ average of 3%.
mn in the Commercial tyre division.
4.4. Continental Statistical data
Continental Tyre Divisions’ net sales Year Sales Change in %

2006 6.1 5.8%
Source: Xerfi Global with Continental annual reports. 2007 6.4 4.3%
2008 6.5 1.2%
2009 5.7 -11.4%
Change in % Change in %
Continental Tyre’s revenues by activity Segment
unit: share in %; annual % change % of consolidated sales (2009/2008) (2008/2007)
Passenger and Light
3.10% 1.00%
Source: Xerfi Global with Continental annual reports. Truck tyres 23%
Commercial Vehicle
-3.10% 1.00%
Tyres 5%
% of sales Change in % Change in %
Continental Tyre’s revenues by region Region
Germany 20% -1.1% -0.5%
Source: Xerfi Global with Continental annual reports. Rest of Europe 49% -1.0% 2.5%
NAFTA 20% 0.7% -1.1%
Asia 5% 1.0% 0%
Other Countries 5% 2.0% 0%
Year Operating profit Operating margin
Continental’s operating profit
unit: annual % change; share in % 2005 - 14.1%
2006 -4,2% 12.8%
Source: Xerfi Global with Continental annual reports.
2007 9,6% 13.4%
2008 -33,2% 8.9%
2009 -1,8% 9.8%
Year R&D expenses R&D ratio
Continental’s R&D expenses
2006 2.4% 2.4%
2007 4.1% 2.4%
2008 1.8% 2.4%
2009 1.9% 2.8%
4.5. Pirelli Company Overview
PIRELLI
PIRELLI PIRELLI PIRELLI PIRELLI PIRELLI PIRELLI & C.

TYRE AMBIENTE LABS REAL BROADBAN ECO
(100%) (51%) (100%) ESTATE D TECHNOLOG
(68%) SOLUTIONS Y (51%)

Headquarters Milan, Italy
Pirelli Group Key figures

Pirelli Tyre has been the core business of the Pirelli Group for over a century: after
its foundation in 1872 by a young engineer named Giovanni Battista Pirelli, the
company diversified from insulated telegraph cable (1879) to the first bicycle tyres
Operating income €217 mn (1890). The first automobile tyre came off the line in 1901.
Pirelli tyre designs, develops, manufactures and markets tyres - for motor vehicles,
Net consolidated profit € -23 mn industrial vehicles and motorcycles - and steel cord.
The Group runs 20 plants in 11 countries throughout the world.
Staff 29,750
Pirelli Tyre International presence Italy 9% of sales

Rest of Europe 33% of sales
North America 8% of sales
Central and South America 34% of sales
Africa, Asia, Pacific 16% of sales
4.5. Pirelli Business segments
MAIN
OPERATING
SEGMENT % OF SALES MARGIN OPERATIONS CUSTOME
RS
BUSINESS The Consumer line includes tyres for vehicles generally used
CONSUME 70% 8.3% by private individuals: for example, tyres for cars, SUVs, vans Consumers
R and motorcycles.
PIRELLI 89.5 The Industrial line is for vehicles for the professional
TYRE INDUSTRI % transportation of goods or passengers. Products of this line
include tyres for trucks, buses, earth-moving equipment and
AL 30% 9.6% farm machinery. The Industrial line also includes the Companies
BUSINESS production of steel cord, the technological component used to
produce high-performance radial tyres.
Fund & Asset management.

• Commercial Asset Management & Services
PIRELLI REAL ESTATE Consumers and
6.1% -1.7% • Residential Asset Management & Services
SGR • NPL Asset Management & Services companies
The Pirelli Broadband Solutions portfolio consists of three

main product lines: residential and small business broadband
PIRELLI BROADBAND 3% Consumers and
3% access routers, IP set-top-boxes, "extenders" (products to
ACCESS create home broadband networks), solutions for fixed-mobile companies
convergence and remote management platforms.
Pirelli Ambiente: production of quality fuel from waste
- (CDR-Q); photovoltaic energy
Pirelli Labs are the core of advanced research for the entire
OTHER BUSINESSES 1.4% - business of the Pirelli group Companies
Pirelli Eco Technologies is specialised in the creation of
-4% technologies that can reduce emissions from diesel vehicles
and heating plants.
Source: Xerfi Global with Pirelli.
4.5. Pirelli Corporate strategy
The Pirelli Group prioritises its core business of tyres and the similar business of particulate
filters brought together in the “Tyre and Parts” Division. In this sense, the group disposed of
Strengthening its leadership in the tyre
nonstrategic assets, including the stake held in Alcatel Lucent Submarine Networks, a sale
industry
completed in March 2009 and the stake held in Telecom Italia S.p.A..
In accordance to its three-year plan for 2009-2011, Pirelli is aiming to increase the “green”
proportion of its products from 20% to 40% over the period.
Green performance All the new tyres of the Cinturato line, a historic Pirelli Tyre brand, recently relaunched, are in
keeping with the company’s ‘green performance’ strategy, as are the tyres of the ‘Winter’
family.
Investing in new or increased production capacity in Russia, China, Romania, Brazil and Italy
(especially due to the new industrial hub of Settimo Torinese, which will be completed in 2010
and be fully operational at the beginning of 2011) is a priority for Pirelli.
Investing in growth markets
In keeping with the 2009-2011 business plan, in the three-year period the group is to devote
about 200 million dollars for capacity expansion in South America, in addition to the 100
million dollars already invested in the previous year. This strategy of reinforcement in the area
aims to consolidate Pirelli Group’s leadership in the South American market. The new
investments in this region will enable a 20% increase in car and motorcycle tyre production.
4.5. Pirelli Recent events
Date Event
January 2009 Brembo, Magneti Marelli and Pirelli announced the start of technological cooperation aimed at developing
avant-garde solutions for the Italian and international automotive industry.
March, 2009 Pirelli Tyre launched Cinturato P7, the first environment-friendly high-performance tyre for the high end of
the market.
September 2009 Pirelli signed a "Memorandum of Understanding" with the Hixih Group (formerly the Yinhe Group), a
partner of the group since 2005 in the production of tyres, for the creation of a filter production plant at
Yanzhou, in the province of Shandong (China).
In keeping with the strategy and the objectives of the 2009-2011 business plan of focusing on the core
business, the company decided to simplify its organisational structure and bring together all the activities in
direct support of the core business in the new "Tyre and Parts" Division, responsibility which was entrusted to
Francesco Gori, who also maintains the position of Chief Executive Officer of Pirelli Tyre S.p.A..
November 2009 The European Investment Bank (EIB) and Pirelli Tyre S.p.A. signed a financing agreement for 100 million
euros granted by the EIB to support Pirelli Group projects in the area of research and development for the
2009-2012 period.
December 2009 Pirelli and Russian Technologies signed an agreement for the implementation of the ‘Memorandum on
Terms’. The agreement provides for an extension of the collaboration begun in the context of the joint venture
for the production of tyres and steel cord in Russia.
The European Investment Bank (EIB) and Pirelli Tyre S.p.A. signed a 50 mn euro loan agreement. The loan
is to be used to increase the production of tyres for cars and light commercial vehicles at the Pirelli factory in
Slatina, Romania, and will be a part of the investments of 250 mn euros announced by the group for its
Romanian business for the three years 2009-2011.
February 2010 Pirelli Tyre announced a 4 to 6 % price increase in European markets for car, motorcycle and truck tyres.
May 2010 The Board of Directors approved plan for separation of its real estate divison, Pirelli Re. This demonstrates
Pirelli’s engagement to focus on its core business: tyres.
June 2010
Pirelli confirmed as exclusive Formula One tyre supplier from 2011 to 2013.
4.5. Pirelli Key data
Pirelli Tyre’s net sales Pirelli Group’s cash flow from operating activities
4,400 16% 600
4,200 12%
4,000 400
8%
3,800
4%
3,600 200
0%
3,400
3,200 -4% 0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Pirelli annual reports. Source: Pirelli annual reports.
Chart 1: Chart 2:
Net sales in financial year 2009 came out at 3,992.9 mn euros, The Pirelli group generated a considerable amount of cash flow
down 2.6% compared to 2008. This drop is explained by a from its operating activities in 2009, thanks to the positive
negative change in volumes (-5.8%) and an adverse effect of the contribution of the Pirelli Tyre cash flow (395 mn euros) and
exchange rates (-1.6%) income from the disposal of nonstrategic assets.
4.5. Pirelli Revenues by segment
Pirelli Tyre’s revenues by segment Pirelli Tyre’s change in revenues by segment

Motorcycle St eelcord / other

tyres t yres
8%
Mot orcycle tyres

Car tyres
63% Tyres for
industrial Tyres for
vehicles indust rial vehicles
27%
Car tyres
Steelcord /
-3% -2% -1% 0% 1% 2% 3% 4%
other tyres
2% 2009/2008 change in % 2008/ 2007 change in %
Chart 1: Chart 2:
As the distribution of net sales by product shows, Pirelli Tyre The contraction of sales was more abrupt in the Industrial
makes most of its revenues (63%) from its car tyre operations. segment (-10.3%), while in the consumer segment (cars and
Additionally, its industrial tyre operations bring 29% of all motorcycle tyres) there was slight overall growth (+0.9%).
income and the motorcycle tyres comprise 8% of net sales. 2008).
4.5. Pirelli Revenues by region
Pirelli Tyre’s revenues by region Pirelli Tyre’s change in revenues by region

Central and Africa, Asia,

South Pacific
North
Ameri ca Ameri ca
34.0% Cent ral and
8.0%
South America
North America
Rest of Europe
Rest of
Afri ca, Asi a
Europe Italy
Paci fi c
33.0%
16.0%
-4% -2% 0% 2% 4% 6%
Ital y
9.0% 2009/ 2008 change in % 2008/ 2007 change in %
Chart 1: Chart 2:
Pirelli Tyres has, above all, managed to establish a strong 2009 was a year with a market scenario of recession above all in
presence in the emerging markets of Central and South America, the mature markets. Consequently, the proportion of turnover in
a region that makes up for 34% of its revenues. Europe accounts Europe fell from 45% in 2008 to 42%, owing chiefly to the
for 41% and the Africa, Asia pacific regions for 16% of its sales. reduction of volumes in the Original Equipment channel.
Nonetheless, light growth was achieved in its other markets.
4.5. Pirelli Operating margin
Pirelli’s operating income Pirellis Tyre’s operating margin

unit: bn euros unit: %
390 11%
9.1%
8.7% 8.7%
340 9%
8.6%
290 7% 6.1%
240 5%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
2009 operating income was up compared to the previous year, Pirelli Tyre’s high operating margins are a result of the positive
amounting to €344.5 mn, a result of Pirelli Tyre’s effort to trend in the costs of factors of production, in particular thanks to
increase its efficiency (namely the 15% reduction of workforce in
the reduction in the cost of raw materials. This prompted an
Western Europe) by improving the industrial framework and
adjusting the overheads structure to the new market scenarios. improvement in the results achieved in 2008, more than
offsetting the negative effect of the reduction in sales volumes.
4.5. Pirelli Research and development
Pirelli Tyre’s R&D expenditure Pirelli Tyre’s R&D ratio

160 5%
150 4.0%
4% 3.7% 3.5%
3.6%
3.3%
140
3%
130
120 2%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
In 2009, a year which required closer attention to costs, Pirelli

In 2009, R&D expenditures amounted to 133 mn euros. reduced the ratio of research and development expenses to net
Traditionally, Pirelli Tyre’s R&D activity is focused on sales, from 3.5% to 3.3%, but this level still keeps the company
sustaining improvement and innovation of the product portfolio at the top in the industry worldwide in terms of process and
(UHP, Winter, Runflat, SUV and motorcycle tyres). product innovation, which have always been central elements for
the competitive position in the sector.
4.5. Pirelli Statistical data
Pirelli Tyre’s net sales Year Sales Change in %

2006 3.9 8.7%
Source: Xerfi Global with Pirelli annual reports. 2007 4.1 4.3%
2008 4.1 -1.4%
2009 3.9 -2.6%
Pirelli Tyre’s revenues by activity % of sales Change in % Change in %

Segment
Car tyres 63% 3% -1%
Source: Xerfi Global with Pirelli annual reports. Motovelo tyres 8% -1% 1%
Tyres for industrial
27% -2% 1%
vehicles
Steel Cord / other tyres 2% 0% -1%
Pirelli Tyre’s revenues by region % of sales Change in % Change in %

Region (2009/2008) (2008/2007)
unit: share in %; annual % change
Italy 9% 0% -1%
Source: Xerfi Global with Pirelli annual reports.
Rest of Europe 33% -3% -2%
North America 8% 1% -1%
Central and South America 34% 1% 5%
Africa, Asia, Pacific 16% 1% -1%
Pirelli’s operating profit Year Operating profit Operating margin

2006 3.9% 8.6%
Source: Xerfi Global with Pirelli annual reports. 2007 4.6% 8.6%
2008 -29.8% 6.1%
2009 37.8% 8.6%
Pirelli’s R&D expenses Year R&D expenses R&D ratio

2006 0.7% 3.7%
2008 -2.0% 3.5%
2009 -8.3% 3.3%
4.6. Sumitomo Company Overview
SUMITOMO
Tyre Business Sports Business Industrial and Other

82.7% 12.4% Products Business
4.9%
Headquarters Kobe, Japan
Sumitomo Group Key figures
The company is part of the Sumitomo group, one of Japan's largest keiretsu, or
Net consolidated sales € 3.99 bn conglomerates and was established as Dunlop Rubber (Far East) Ltd. in 1909, and
later on in 1917 became Sumitomo Rubber Industries, Ltd.
Operating income €219 mn The Sumitomo Rubber Group manufactures and sells tyres in brands such as
Dunlop, Falken and Goodyear as well as vibration control damper, artificial turf,
Net consolidated profit €69.8 mn printing blankets, fine rubber, rubber gloves and others.
Staff 20,797
Sumitomo Tyre International presence Japan 55.4% of net consolidated sales

North America 14.2% of net consolidated sales
Europe 4.5% of net consolidated sales
Asia 12.5% of net consolidated sales
Other areas 13.4% of net consolidated sales
4.6. Sumitomo Business segments
OPERATING MAIN
SEGMENT % OF SALES MARGIN OPERATIONS
CUSTOMERS
Operations in the tyre segment involve the production

TYRE BUSINESS and sale of a wide range of tyres for a variety of Consumers and
82.6% -1.7% vehicles and applications such as passenger cars,
companies
trucks, buses, motorcycles and industrial applications.
Operations in the Sports segment involve the

SPORTS BUSINESS production and sale of a variety of sporting goods, Consumers and
12.5% 7.2% principally golf balls, golf clubs, golf bags and tennis companies
balls.
Operations in the Industrial and Other Products

segment involve the production and sale of a variety of
INDUSTRIAL AND
rubber and rubber-based products, including vibration-
OTHER PRODUCTS Consumers and
5.1% 4.3% control products, flooring for gymnasiums, all-weather
BUSINESS companies
tennis courts, track and field facilities, marine fenders,
precision rubber parts for office machines, and blankets
for offset printing presses.
Source: Xerfi Global with Sumitomo.
4.6. Sumitomo Corporate strategy
Anticipating a growing demand for better-performing fuel-efficient tyres in the original

Further development of fuel-efficient
equipment market, the Sumitomo Tyre is dedicated to improving their capabilities in material
tyres development and production technology and to accelerate the development and
commercialisation of eco-friendly tyres, including those that are fuel-efficient and fossil
resource free. A specific instance of such initiatives is the Material Development Headquarters,
established in 2010.
Optimal global tyre production structure In order to pursue future growth. Sumitomo Tyre launched sales subsidiaries and commenced
full-scale sales activities in areas such as Russia, Latin America and the Middle East, where
demand expansion is anticipated.
In North America, Sumitomo strives to reinforce the marketing capabilities of Falken Tyre
Corporation, while establishing Falken Tyre Europe GmbH in Germany seeking to bolster sales
under the Falken brand in Europe.
Another focal point lies in the Asian replacement market, where Sumitomo Tyre plans to double
sales by 2015, a target underpinned by enhanced production at its factory in Thailand.
Stable procurement of natural rubber At the end of 2009, Sumitomo Tyre decided to jointly establish a natural rubber plantation and a
processing factory with a local company in Thailand. This is expected to further accelerate our
R&D activities for eco-friendly tyres, including the development of new rubber materials for
fuel-efficient tyres.
Cost reduction Sumitomo Tyre intends to cut costs dramatically for small-inch tyres, which are expected to
achieve growth in Japan and the rest of Asia.
4.6. Sumitomo Recent events
Date Event
April 2009 Sumitomo Rubber received "Environmental Achievement of the Year" award for developing 100% fossil
resource free tyres at Tyre Technology Expo 2009 in Hamburg, Germany, and for its ambition to start sales of
100% free of fossil resource materials by 2013.
May 2009 Sumitomo Rubber produced its 100,000,000th tyre on Monday, April 27, 2009 at its facility in Indonesia.
July 2009 Falken Tyre Europe was established in order to expand sales of Falken and Ohtsu branded replacement tyres
in Europe: Sumitomo Rubber Industries, Ltd., Japan, announced the foundation of a tyre selling company
named Falken Tyre Europe GmbH in Offenbach, Germany as part of its global sales strengthening activities.
September 2009
Sumitomo Rubber Tyre technical centre opened in Kobe on the occasion of the company’s 100th anniversary.
October 2009 Sumitomo Rubber Industries announced its Dunlop's 4th Generation Runflat tyres: with its new thermal
control technology, the company has succeeded in developing the 4th generation runflat tyres which provide
ride comfort equivalent to or better than standard tyres, while maintaining runflat performance of the tyre.
SRI Tyre Trading announced an increase in overseas tyre prices: Dunlop, Falken, Sumitomo and Ohtsu brand
tyres for passenger cars, light trucks, trucks and buses and motorcycles in Asia, Middle East, North America,
Europe, Central and South America, Africa and the Pacific region.
March 2010 Sumitomo Rubber received "Tyre Technology of the Year" award for its 4th generation Runflat tyre
technology at the Tyre Technology Expo 2010.
May 2010 'FALKEN' tyre entered the Nurbrugring 24-hour race: the Sumitomo Rubber group set up the 'Falken
motorsports' team, and entered the 'Nurbrugring 24- hour race’ taking place in Germany, in order to enhance
the image of FALKEN branded tyres.
July 2010 Sumitomo Rubber announced its plan to establish a second tyre plant in China to produce and sell radial
passenger car tyre in China. Construction is set to begin in September 2010, with a total investment of 297
million dollars. The company’s decision to establish the new plant is driven by China’s surging car
production.
4.6. Sumitomo Key data
Sumitomo Rubber consolidated net sales Sumitomo Tyre net sales

5,000 10% 3,900
4,500
0% 3,600
4,000
-10% 3,300
3,500
3,000 -20% 3,000

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Sumitomo annual reports. Source: Sumitomo annual reports.
Chart 1: Chart 2:
Significantly affected by weak private-sector consumption and a In addition to a 30% year-on-year decrease in the Japanese
slump in corporate capital investment in the Sports and Industrial automobile production that had a major impact on the sales of
businesses, and a decline in the Japanese automobile production original equipment tyres, demand in the replacement tyre market
in the tyre segment, Sumitomo Rubber’s consolidated net sales also dropped substantially both in Japan and overseas, leading to
for 2009 fell by 13.3% to €4027 mn. a 13.5% decline in the Tyre business in 2009.
4.6. Sumitomo Revenues by segment
Sumitomo Rubber’s revenues by segment Sumitomo Rubber’s revenues by segment

Tyre
83% Tyre
Sports
Sports
12% Industrial
Industrial -20% -10% 0% 10% 20% 30%

5%
Chart 1: Chart 2:
In 2009, Sumitomo’s tyre operations accounted for 83% of Confronted with a business environment of unparalleled
consolidated sales. The sports and industrial segment shares in severity, Sumitomo Group recorded a negative performance in
the group’s revenue were 12% and 5% respectively. These each segment of its activity (-13.5%, -11.7 and -10.3 in its tyre,
proportions are relatively unchanged from previous years. sports and industrial operations respectively).
4.6. Sumitomo Revenues by region
Sumitomo Rubber’s revenues by region Sumitomo Rubber’s change in revenues by region

North Other areas

America
14.2% Europe
4.5% Asia
Europe
Asia
12.5% North America
Japan
Other areas Japan
55.4%
16.0%
-40% -30% -20% -10% 0% 10% 20% 30%
Chart 1: Chart 2:
Sumitomo’s sales are largely concentrated in Japan and countries Although managing to expand its sales in all regions in the 2008
in the Asian zone (67.9%), and to a milder extent in North fiscal year, in 2009 the Group’s sales were on a downhill trend.
America (14.2%), Europe (4.5%) and other zones (16%). The weakest performance was recorded in Europe with sales
declining by 28.7%.
4.6. Sumitomo Operating margin
Sumitomo Tyre’s operating income Sumitomo Tyre’s operating margin

350 12%
10.0%
280
10%
210
7.5%
7% 6.1%
5.2%
140
5% 3.2%
70
0 2%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Although consolidated net sales for fiscal 2009 fell 13.3% year In 2009, Sumitomo Tyre accomplished a better performance in
on year on the consolidated earnings front, operating income
its operating margin which stood at 5.2% compared to 3.2% in
grew 12.0% to € 220.6 million.
2008, despite challenging economic environment with high raw
materials price volatility.
4.6. Sumitomo Research and development
Sumitomo Tyre R&D expenditures Sumitomo Tyres R&D ratio

130 4%
120
3,4%
110
100 3,3% 3,3%

3% 3,2%
90 3,2%
80
70
60 3%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
In its tyre business, Sumitomo Rubber Industries has pursued The Sumitomo Rubber Group devotes more than 3% of its
technology exchange based on a global alliance with the revenues to research and development (R&D) activity. In 2009,
Goodyear Tyre & Rubber Company since 1999. In fiscal 2009, the ratio was at 3.4%, as the group completed its ‘Tyre Technical
R&D expenses in the tyre business totalled € 114.3 mn. Centre’ in 2009, the key facility of the Group’s R&D activities
for tyre technology.
4.6. Sumitomo Statistical data
Sumitomo Tyre net sales Year Sales Change in %

unit: bn euros ; annual % change ; 2005 3.0 -2.8%
2006 3.3 8.1%
Source: Xerfi Global with Sumitomo annual reports.
2007 3.6 11.1%
2008 3.8 4.7%
2009 3.3 -13.5%
Sumitomo Rubber revenues by activity Segment % of sales Change in % Change in %

Tyre 82.6% -13.5% 4.7%
Source: Xerfi Global with Sumitomo annual reports. Sports 12.5% -11.7% 24.8%
Industrial 5.1% -10.3% 1.1%
Sumitomo Rubber revenues by region Region % of sales Change in % Change in %

Japan 55.4% -11.6 % 1.6%
North America 14.2% -13.2% 12.6%
Europe 4.5% -28.7% 24.2%
Asia 12.5% -10.2% 24.5%
Other areas 13.4% -16.6% 2.7%
Sumitomo Tyre operating profit Year Operating profit Operating margin

2006 -33.6% 6.1%
Source: Xerfi Global with Sumitomo annual reports. 2007 36.1% 7.5%
2008 -55.8% 3.2%
2009 42.1% 5.2%
Sumitomo’s R&D expenses Year R&D expenses R&D ratio

2006 8.0% 3.3%
2007 6.2% 3.2%
2008 6.0% 3.2%
2009 -6.9% 3.4%
4.7. Yokohama Company Overview
The Yokohama Rubber Company, Limited

Tyre Group Multiple Business group
78.8 % of sales 21.2% of sales
Fiscal year ended March, 31st 2010

Headquarters Tokyo, Japan
Key figures
The company was established in October 1917, in Yokohama, Kanagawa
Prefecture, with a joint investment from Yokohama Cable Manufacturing Co., Ltd.
Net consolidated sales €3.5bn
(currently Furukawa Electric Co., Ltd.) and BF Goodrich, of the United States.
Operating income €97.6mn With 9 factory and plants located in Japan, and overseas subsidiaries located in
countries such as Canada, Australia, Philippines, Vietnam, Thailand, Yokohama is
Net consolidated profit €-43mn the world’s 7th largest tyre manufacturing company.
Yokohama employs more than 17,000 people.
Staff 17,566
International presence Japan 69.5% of net sales

The Americas 19.4% of net sales
Others 6.4% of net sales
4.7. Yokohama Business segments
% OF OPERATING MAIN
SEGMENT OPERATIONS
SALES MARGIN CUSTOMERS
Tyres for passenger cars, trucks and buses, light trucks,

Consumers and
TYRE GROUP 82.8% 5.6% mining and construction equipment and industrial vehicles,
companies
aluminium alloy wheels and automobile-related components
Conveyor belts, rubber plates, various hoses, marine fenders,

oil spill containment booms, marine hoses, air springs,
highway joints, rubber support, anti-seismic laminated rubber
sheets for buildings, water-repellent materials, water-proof
materials, sound and vibration-proof materials, adhesives,
sealants, golf-related products, fuel tanks for aircraft, aircraft Consumers and
MULTIPLE BUSINESS 17.2% 1.0%
seals, acoustic materials, bathroom units and drinking water companies
tanks for commercial aircrafts, various honeycomb products,
metal tanks, oil tanks, thermal insulation materials,
couplings, sealing compounds, V-band couplings, flex
couplings, electromagnetic shielding materials, information
processing services, real estate and others
Source: Xerfi Global with Yokohama.
4.7. Yokohama Corporate strategy
Yokohama wishes to increase its global presence through a top-of-the-line product in fuel-saving
tyres, the ‘dB super E-spec’ (marketed in Japan as the ‘DNA dB super E-spec’). The product was
Enhance presence in the global launched in the United States in July 2009.
marketplace Also, the company is investing in the promotion of high-performance tyres under the ADVAN
name, Yokohama Rubber’s global flagship brand.
Following an expansion in the production capacity for tyres in accordance with regional
Respond flexibly to demand in each
circumstances, Yokohama is building a plant to produce passenger car tyres in south-western
market
Russia in the Lipetsk special economic zone. The plant, scheduled to begin operation in 2011,
will have an initial yearly production capacity of 1.4 million tyres.
Furthermore, the company plans to restart the temporarily suspended expansion project at
Yokohama Rubber’s subsidiary Hangzhou Yokohama Tyre Co Ltd in China and increasing its
production capacity to 4.1 mn tyres a year, from 3 mn currently.
Globalise operations more thoroughly Yokohama Rubber is considering outsourcing some tyre production to local partners in emerging
markets to better respond to demand in different regions.
4.7. Yokohama Recent events
Date Event
Yokohama announced organisational changes aiming to improve its business efficiency
and speed by reorganising itself around six functional centres: sales & marketing,
May 2009 production, technical, quality assurance, product planning, and logistics.
Yokohama Rubber decided to retreat from aircraft tyre business, since it saw no strong
growth potential for the future.
The next-generation eco tyre technology "AIRTEX Advanced Liner" is released. It is a
November 2009
new material both impermeable (airtight) and flexible, and can substantially reduce the
volume of air naturally leaking from a tyre.
February 2010 Yokohama Rubber released "C.drive2," a new high-performance eco tyre for family
cars in all classes, from small to large.
Yokohama Rubber held a groundbreaking ceremony for a new tyre plant in Russia. The
construction of the new tyre plant is aimed at delivering high quality tyres to the
April 2010 Russian market in the fastest delay. Yokohama Rubber And Itochu Corporation
established a tyre sales company, Yokohama Russia, in 2005 in Moscow. Yokohama
Russia has increased sales at a steady pace, making Russia an important market for
Yokohama Rubber.
The opening ceremony for its natural rubber processing factory in Thailand was held in
Surat Thani province. Teck Bee Hang has been Yokohama’s largest Thai supplier of
May 2010
natural rubber, however the processing factory location at the Malaysian boarder area
was considered insecure. The new factory area Surat Thani Province alleviates this
concern.
Yokohama announced its passenger car and light truck tyre plant in Thailand would
June 2010 undergo expansion. The plant had an annual production capacity of 1.4 million tyres.
The production capacity is going to be expanded to 4 million tyres by April 2011.
4.7. Yokohama Key data
Yokohama’s net sales Yokohama’s tyre sales

4,500 20% 3,250
10%
4,000
3,000
0%
3,500
-10%
2,750
3,000
-20%
2,500 -30% 2,500

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Yokohama annual reports. Source: Yokohama annual reports.
Chart 1: Chart 2:
Yokohama Rubber posted lower sales in FY 2009. Its sales were The Group’s overall decline in sales is also shown by the Tyre
down nearly 10% from €3.9 bn in 2008 to €3.5 bn. This result is business results in 2009. Revenues fell to €2.8 bn from the €3bn
due mainly to the declining demand in mature markets such as recorded the year ending in March, 2008.
Japan, where Yokohama sells most of its products.
4.7. Yokohama Revenues by segment
Yokohama’s revenues by segment Yokohama’s change in revenue by segment

Tyres Diversified
79% products
Multiple
Business
21%
Tyre
-15% -10% -5% 0% 5% 10% 15%

Chart 1: Chart 2:
Net sales in the tyre segment totalled 2.8 billion euro, an 8.1% The recent economic downturn and the appreciation of the yen
decrease from fiscal 2008. Tyre operations account for 79% of contributed to a decline of net sales for two years in a row, in
the group’s revenues, compared to 77.3% in 2008. both segments of the Yokohama Group. Nonetheless, the drop
was milder in the tyre group (-8.1%/ -4.8% in 2009/2008) versus
the multiple business group (-15.9% and -10.7% in 2009/2008).
4.7. Yokohama Revenues by region
Yokohama Rubber’s revenues by region Yokohama Rubber’s change in revenues by region

Japan Others
69.5%
North
America Asia
19.4%
North America
Japan
Asia
4.7%
Others -15% -11% -7% -3% 1% 5% 9% 13%
6.4% 2009/2008 change in % 2008/2007 change in %
Chart 1: Chart 2:
Yokohama Rubber has a strong foothold in Asia and especially In 2009, Yokohama Rubber’s progression has declined in all
Japan, where it concentrates 70% of sales. The North American geographical segments, markedly in Japan and North America,
region and Asia contribute by 19.4% and respectively 4.7% to the markets hardest hit by the economic slump and where the
the Group’s €3.5 bn revenues. company captures 90% of its profits.
4.7. Yokohama Operating margin
Yokohama Tyre’s operating profit Yokohama Tyre’s operating margin

210 8% 7.9%
7.4%
6.4%
175
6%
140 4.1%
4%
105 2.9%
70 2%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Yokohama Rubber posted a € 156 million operating profit for Yokohama’s operating margin has been dropping since 2007. It
2009, more than the half of the figure recorded the previous year, stood at 4.1% in 2008 and at 2.9% in 2009. The weak
showing improved operational efficiency. performance is due to the increase in raw material prices during
the recent economic crisis.
4.7. Yokohama Research and development
Yokohama’s R&D expenditures Yokohama’s R&D ratio

120 4%
110 3.2%
3.0%
2.9%
3% 2.8%
100 2.8%
90 2%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Research and development expenses for the year ending March Yokohama devotes around 3% of its revenues to research and
31, 2010, were € 101 million, 13% less than in 2008, reaching its development. In 2009, the ratio stood at 2.8%, down from the
lowest level in 5 years. 3% in 2008.
4.7. Yokohama Statistical data
Yokohama’s net sales Year Sales Change in %

unit: bn euros; annual % change ; 2006 3,4 11.4%
2007 3,7 11.1%
Source: Xerfi Global with Yokohama annual reports. 2008 4,2 13.3%
2009 3,9 -4.6%
2009 3,5 -19.7%
Yokohama’s revenues by activity Segment % of sales Change in % Change in %

Tyres 82.8% -18.0% -4.6%
Source: Xerfi Global with Yokohama annual report Diversified products 17.2% -27.1% -4.4%
Yokohama’s revenues by region Region % of sales Change in % Change in %

Japan 26.2% -21.3% -8.1%
Source: Xerfi Global with Yokohama annual reports. The Americas 43.3% -19.9% -6.3%
Europe 13.9% -23.6% -8.0%
Others 16.7% -12.5% 12.8%
Yokohama’s operating profit Year Change in Operating profit Operating margin

unit: annual % change; share in % 2005 - 4,9%
2006 -4,0% 4,2%
Source: Xerfi Global with Yokohama annual reports. 2007 57,2% 6,0%
2008 -61,3% 2,5%
2009 67,5% 4,6%
Yokohama’s R&D expenses Year R&D expenses R&D ratio

unit: annual % change; share in % 2005 8,9% 3,2%
2006 0,6% 2,9%
2008 -0,1% 3,0%
2009 -13,0% 2,8%
4.8. Hankook Company Overview
Hankook Tyre Group
Hankook Tyre ATLASBX Daehwa emFrontier

Engineering and
90.3% of net sales 7.2% of net sales Machinery 1% of net sales
f l
Fiscal year ended December 31, 2009
Headquarters Seoul, South Korea
Key figures
Hankook Tyre was established in 1941 as the first tyre maker in Korea.
Today, Hankook is the domestic industry leader, ranked 8th globally and 3rd in the
Net consolidated sales €2.9 bn Asian region.
Hankook’s global distribution network consists of four regional headquarters and
Operating income €349.8 mn 80 subsidiaries and sales offices mainly in Korea (37 sales offices) and China (14
sales offices).
Net consolidated profit €211.9 mn More than 70 percent of Hankook’s revenue is earned outside Korea, with Europe
being its most important overseas market.
Staff 14,300
International presence Korea 16% of tyre net sales
The Americas 25% of tyre net sales

Europe 30% of tyre net sales
Asia Pacific 18% of tyre net sales
Middle East and Africa 11% of tyre net sales
4.8. Hankook Business segments
MAIN
% OF OPERATIN
SEGMENT OPERATIONS CUSTOMER
SALES G MARGIN
S
Consumers and
HANKOOK TYRE 90.3% 12.1% A full range of tyre-related services.
companies
Makes batteries for cars and trucks.

Over the years, the operation has expanded into marine Consumers and
ATLASBX CO., LTD. 7.2% -
batteries and industrial batteries to lead Korea’s battery companies
industry
DAEHWA
ENGINEERING & Established in 1992 to build essential machines used in tyre Consumers and
1.5% -
MACHINERY CO., manufacturing companies
LTD
EMFRONTIER CO., Provides e-Business-based IT solutions that include system

1% - Companies
LTD building and operation.
Source: Xerfi Global with Hankook.
4.8. Hankook Corporate strategy
Hankook wants to grow into a respected global company and is working aggressively to improve
the quality of its products and ensure a sustainable growth by :
Brand value-up Increasing product quality (the group’s brand portfolio consists of three individual names:
Hankook, Aurora and Kingstar).
Improved competitiveness in the original equipment market by enhancing R&D focus on
tyres with low rolling resistance.
Hankook intends to achieve world wide operational excellence. To this end it implements several
measures:
rationalization of resources;
increased operational efficiency: Hankook reformed the global supply chain planning unit to
Global operation excellence maximise efficiency in supply chain management (SCM). Moreover, a new unit has been
established to attend to the strategic operations of all logistics activities. At the same time,
the strategic and support organizations at Regional Headquarters outside Korea were
separated for improved efficiency;
integration of corporate social responsibility management (CSR).
The group was among the few industry players to register growth in 2009, despite challenging
market conditions due to the sharp economic activity slowdown. Hankook has been
strengthening its global production capacity by:
Global growth acceleration
Establishing two factories, at Jiangsu and Jiaxing, China;
Expanding its facilities in Hungary to provide better access to European markets;
Beginning construction of its third expansion facility at Geumsan (Korea).
4.8. Hankook Recent events
Date Event
January 2009 Hankook Tyre announced sales records in fiscal 2008 despite a difficult economic climate. Its global sales
increased by approximately 26%, while larger tyre manufacturers saw their sales declining sharply.
May 2009 Hankook’s "Made in Europe" tyres were chosen as original equipment fitment for Volkswagen Transporter,
Caravelle, Multivan and California. This represents the first delivery to Volkswagen from Hankook's Hungarian
factory.
June 2009 Hankook has been appointed as original equipment supplier to Audi. This is a significant event for Hankook, one
of the few medium-scale players in the industry whose strategy is to become a leader in the premium tyres
segment.
Audi’s A3 models will be rolling off assembly lines with Hankook’s Ventus S1 evo ultra-high performance tyre.
September 2009 Hankook announced factory extension in Hungary, one of its main production locations in Europe.
Hankook Tyre plans to focus on the European market with additional investment in its Hungary plant: the amount
devoted to this project is 230 million euros.
The company announced its plans to reach a production capacity of ten million tyres per year by 2011.
January 2010 Hankook Tyre announced record global sales and operating profit in 2009. Its global sales increased by 18% year-
on-year and the global operating profit rose five-fold on a year-over-year base. Hankook is among the few
companies that generated improved sales in 2009 compared to 2008, in the context of a general economic
recession.
Hankook Tyre rolled its 10 millionth tyre off the production line in Hungary, two and a half years following the
opening of its manufacturing plant in Rácalmás, Hungary.
May 2010 Hankook Tyre’s new European Factory received ‘A’ qualification on Volkswagen Audit. Volkswagen is one of
the major European car manufacturers using Hankook tyres. The “A” mark allows Hankook to manufacture all
kinds of original equipment tyres for the Volkswagen group.
June 2010 Hankook tyre announced it would start supplying its original equipment tyres to Lincoln MKT, Ford’s luxury
vehicle.
4.8. Hankook Key data
Hankook consolidated net sales Hankook tyre Sales

3,500 25% 3,000
3,000 2,500
20%
2,500
2,000
2,000
15% 1,500
1,500
1,000
1,000
10%
500
500
0 5% 0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: Hankook annual reports. Source: Hankook annual reports.
Chart 1: Chart 2:
In 2009, Hankook’s global operations generated net sales of € Revenues from tyre sales have been on an uphill trend for the
2,902 mn on a consolidated scale, 15% higher year on year. This past years, standing at € 2621, 17.5% higher than in 2008, and
was among the industry’s highest growth rates and above the Big represent more than 90% of Hankook’s consolidated revenues.
Three’s performance.
4.8. Hankook Revenues by segment
Hankook’s revenues by segment Hankook’s change in revenues by segment

Tyres
Tyres
90%
IT Solutions
Machinery
Battery Battery
7%
Machinery
IT solutions 2% -60% -40% -20% 0% 20% 40% 60%
1%
Chart 1: Chart 2:
Hankook’s consolidated net sales for 2009 are divided as The Hankook Tyre operations are expanding quickly, with sales
follows: 90% the share of tyre operations, 7% the battery growing by over 20% from 2007 to 2008. Moreover, despite
segment (AtlasBX), 2% the engineering and machinery lower sales growth for the main actors of the tyre industry,
operations and the smallest share of 1% belongs to the IT Hankook managed to increase its revenues by 17% in 2009
solutions division, emFrontier. compared to the previous year.
4.8. Hankook Revenues by region
Hankook Parent Company’s revenues by region Hankook’s change in revenues by region

Middle East
Domestic 2008/2007
and Africa Korea change in %
11% 16%
Local export 2009/2008
change in %
Europe
Asia Pacific
18%
Asia, except Korea
Sout h and Central America

The Americas
25% North America
Europe
30% -40% -20% 0% 20% 40% 60% 80% 100%
Chart 1: Chart 2:
In 2009, Hankook sold a large share of its tyres in the Asian Hankook’s global performance in 2009 was driven by an increase
region (34%) and Europe (30%). The Americas and the Middle in sales in South and central America. Nonetheless, in its other
East-Africa zones were next with a share of 25% and 11% markets, mainly Asia and Europe, its sales declined in 2009 from
respectively. 2008.
4.8. Hankook Operating margin
Hankook’s operating profit Hankook’s operating margin

400 14%
12.1%
300 12% 10.7%
9% 8.3%
200
7.7%
100 7% 4.7%
0 4%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
While the entire tyre industry showed lacklustre performance, Also, Hankook’s operating margin in 2009 was among the
Hankook posted a year-on-year growth in operating profit highest in the industry (12.1%), an improvement from the 4.7%
(197%), which amounted to €349 mn. in 2008.
4.8. Hankook Research and development
Hankook’s R&D expenditures Hankook’s R&D ratio

60 3%
50 2.5%
2.3%
40 2.3%
1.9%
1.9%
30 2%
20
10
0 1%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
In terms of R&D, Hankook spent more than €50 mn in 2009. Hankook’s R&D ratio stood at 1.9% in 2009, remaining
The amount allocated to its R&D activities has increased unchanged from 2008, but slightly lower than in years previous
gradually for the past five years. to 2008, in line with Hankook’s commitment to build a
reputation in the high-premium tyre segment.
4.8. Hankook Statistical data
Hankook’s net sales Year Sales Change in %

2007 1.7 9.1%
Source: Xerfi Global with Hankook annual 2008 2.0 13.0%
reports. 2009 2.5 24.4%
2009 2.9 14.3%
Hankook’s revenues by activity Segment % of sales Change in % Change in %
Tyre 90.3% 17.6% 25.9%
Source: Xerfi Global with Hankook annual report Battery (Atlas) 7.2% -8.7% 32.0%
Machinery (Daewha) 1.5% 41.6% -43.5%
IT Solutions (emFrontier) 1.0% 3.1% 16.7%
Region % of sales Change in % Change in %
Hankook’s revenues by region
(2009/2008) (2008/2007)
North America 19.7% 11.2% 34.6%
Source: Xerfi Global with Hankook annual South and Central America 5.5% -24.4% 85.1%
reports. Asia, except Korea 16.4% 0.3% 86.0%
Europe 22.0% 26.0% -14.1%
Local export 6.3 -25.8% 3.4%
Domestic 30 12.5% 4.1%
Hankook’s operating profit Year Change in Operating profit Operating margin
2006 -15.2% 8.3%
Source: Xerfi Global with Hankook annual 2007 5.0% 7.7%
reports.
2008 -24.3% 4.7%
2009 197.1% 12.1%
Hankook’s R&D expenses Year R&D expenses R&D ratio
2006 3.0% 2.3%
Source: Xerfi Global with Hankook annual 2007 12.0% 2.3%
reports.
2008 3.1% 1.9%
2009 10.9% 1.9%
4.9. Cooper Company Overview
The Cooper Tire and Rubber Company


Headquarters Ohio, USA
Key figures Cooper was incorporated in the state of Delaware in 1930 as the successor to a
business originally founded in 1914.
Cooper is the 4th largest tyre manufacturer in North America and 9th largest
globally.
Operating income €112.16 mn Cooper places a strategic focus on light vehicle replacement tyres in North
America, but it supplies tyres for small original equipment contracts in China and
Net consolidated profit €92.1 mn Europe.
Based in Findlay, Ohio, Cooper operates 7 manufacturing facilities and 38
Staff 12,568 distribution centres in 9 countries and employs 12,568 persons worldwide.
International presence North America 71% of net sales

Asia 21.2% of net sales
4.9. Cooper Business segments
% OF OPERATIN MAIN
SEGMENT OPERATIONS
SALES G MARGIN CUSTOMERS
Produces passenger car and light truck tyres, primarily for sale in the United
States replacement market.
The segment does not sell its products directly to end users, except for three
NORTH AMERICAN Consumers and
71% 5.6% company-owned retail stores, and does not manufacture tyres for sale to the
TYRE OPERATIONS companies
automobile original equipment manufacturers (OEMs).
In the United Kingdom, the segment produces passenger car, light truck,
racing and motorcycle tyres and markets these products primarily to dealers
in the replacement markets in the United Kingdom, continental Europe and
Scandinavia.
The segment does not sell its products directly to end users nor manufactures
INTERNATIONAL tyres for sale to OEMs in Europe, other than several small contracts with Consumers and
29% 1.0%
TYRE OPERATIONS specialty vehicle manufacturers in the United Kingdom. companies
The segment has two joint venture manufacturing facilities, Cooper
Chengshan and Cooper Kenda, in the People’s Republic of China. These
facilities produce passenger car, light and medium truck tyres, and off-the-
road tyre for export to Europe, North America and other markets as well as
marketed to dealers in the replacement tyre market within China.
Source: Xerfi Global with Cooper Tire and Rubber.
4.9. Cooper Corporate strategy
In order to achieve a sustainable, competitive cost position, Cooper plans to expand its
operations in lower-cost countries. These initiatives include the Cooper Kenda Tire
manufacturing joint venture in China, the Cooper Chengshan joint venture (China) and
Expanding global footprint
an investment in production operations in Mexico.
Tyres from these operations will both provide a lower cost source of tyres for existing
markets and allow the company to expand its market share in Mexico and China.
For the following years, Cooper intends to create a sustainable competitive cost position
by reducing product costs by 10 to 15%. In this sense, Cooper plans to source 35-45% of
its capacity to low-cost countries such as China.
Cooper has undertaken a number of cost saving and profit improvement initiatives. These
Top line profitable growth included a wide variety of projects in the areas of manufacturing, supply chain, selling
and general administrative and logistics.
The implementation of these projects had a favourable impact on the company’s
profitability in 2009.
•
4.9. Cooper Recent events
Date Event
February 2009 Cooper Tire brings new sizes to market announcing an expanded size offering for a
wide variety of its passenger, sport utility vehicle (SUV) and light truck tyres.
September 2009 Cooper Tire announced expansion of its Mississippi plant.
The new expansion, which includes a mixer that is being installed, will enable the plant
to be more competitive in an increasingly challenging market.
November 2009 Cooper Tire announced its plans to increase capacity at its Findlay, Ohio tyre plant.
This represents an additional 10 million dollars investment in automation, cost

improvements and retooling to support market trends. As a result, capacity will increase
and up to 100 people will be hired.
In 2010, the Findlay plant is to play a key role in Cooper Tire's launch of several new
light truck, sport utility vehicles (SUVs) and premium winter tyre products.
March 2010
Cooper Tire & Rubber company increased its ownership at the Cooper Chengshan Tyre
Company - joint venture
Cooper received final approval from the government of the People's Republic of China
to increase its ownership to 65 percent from the existing 51 percent at Cooper
Chengshan Tyre Company (CCT). The cost of the additional shares is approximately 18
million dollars and the transaction will be concluded by the end of March 2010.
May 2010
Cooper Tire & Rubber company reported improved results for the first quarter of 2010.
The company reported a significant increase of 32 percent in net sales, from the prior
year, for the quarter ended March 31st, 2010.
4.9. Cooper Key data
Cooper Tire and Rubber’s net sales Cooper Tire Last Quarter Net Sales
4,500 20% 600
10%
500
4,000
400
0%
3,500 300
-10%
200
3,000
-20%
100
2,500 -30% 0
2005 2006 2007 2008 2009 Q1 2009 Q1 2010
Source: Cooper Tire and Rubber annual reports. Source: Cooper Tire and Rubber annual reports.
Chart 1: Chart 2:
Consolidated net sales decreased by almost half a billion euros in For the first quarter of 2010, Cooper Tires reported a substantial
2009, primarily affected by lower volumes in the North increase in net sales of 32 percent, from the prior year. Operating
American market, and the negative impact of exchange rates in profit was €23.8 mn for the quarter, a € 35.4 mn improvement
its international operations. compared with a loss of €11.6 mn in 2009.
4.9. Cooper Product lines
Cooper Tire and Rubber Rubber’s performance by product line (North American operations)
unit: annual % change in volumes
Cooper’s North American tyre

division produces passenger car and
light truck tyres, primarily for sale in
the replacement market. Light truck tyres
In the United States, the segment’s
unit sales of passenger tyres and light
truck tyres decreased 16% and 4%
respectively in 2009 from 2008.
The total decline in light vehicle tyre
sales was 6%, exceeding the 2.8%
decrease in total light vehicle sales for
the total industry estimated by the
‘American Tyre Association’ (RMA)
for 2009. Passenger tyres
The industry decrease in units sold

was primarily due to the overall
economic circumstances in North
America during the first half of 2009
as impacts of a global recession have -20% -15% -10% -5% 0%
affected tyre demand.
Source: Cooper Tire and Rubber annual reports.
4.9. Cooper Revenues by region
Cooper Tire and Rubber’s revenues by region Cooper Tire and Rubber’s change in revenues by region
North
Europe
America Asia
9.3%
69.6%
Europe
North America
Asia
21.2%
-20% -15% -10% -5% 0% 5% 10% 15%
Chart 1: Chart 2:
Cooper Tire’s sales are predominantly concentrated in the North Sales of the Asian segment continued to grow in 2008 (6.8%
American region. In 2009, its American operations encompassed from 2007) and 2009 (12.6% from 2008). On the other hand, in
70% of all sales, leaving 21% and 9.3% for the Asian and the European and North American operations, Cooper Tire sales
European markets, respectively. continued to decline year-on-year.
4.9. Cooper Operating margin
Cooper Tire and Rubber’s operating profit Cooper Tire and Rubber’s operating margin
150 8%
5.6%
100
4.6%
4%
50
1.2%
0
0% -1.8%
-50
-100 -4%
-7.5%
-150
-200 -8%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
The Company recorded operating profit in 2009 of €112.1 mn Cooper’s margin has changed in line with its operating profit:
compared to an operating loss of € -154.5.mn in 2008. Improved after a negative result of -7.5%, in FY2008, its margin stood at
manufacturing operations contributed to the profit improvement 5.6% the year that ended on December 31, 2009.
from 2008 to 2009.
4.9. Cooper Research and development
Cooper Tire and Rubber’s R&D expenditures Cooper Tire and Rubber’s R&D ratio
17 2%
15
0.9% 0.8%
1% 0.8%
0.8%
13
0.8%
11 0%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Chart 1: Chart 2:
Research and development expenditures were €15.8 mn, €16.5 For the past 3 years, Cooper Tire engaged 0.8% of its net sales in
mn and €16 mn during 2007, 2008 and 2009, respectively. research and development activities. This figure is below the 3%
Cooper conducts extensive testing of its tyre lines, as well as industry average.
new concepts in tyre design, construction and materials.
4.9. Cooper Statistical data
Cooper Tire and Rubber’s net sales Year Sales Change in %

2007 1.8 26.5%
Source: Xerfi Global with Cooper Tire and Rubber 2008 2.1 13.9%
annual reports.
2009 2.0 -1.7%
2009 1.9 -3.6%
Cooper Tire and Rubber’s revenues by Region % of sales (2009/2008) (2008/2007)
region North America 69.6% -5.9% -3.2%
Europe 9.3% -14.3% -4.7%
Source: Xerfi Global with Cooper Tire and Rubber
annual reports.
Asia 21.2% 12.6% 6.8%
Cooper Tire and Rubber’s operating Year Change in Operating profit Operating margin
profit 2005 -60.2% 1.2%
unit: annual % change; share in %
2006 -279.9% -1.8%
Source: Xerfi Global with Cooper Tire and Rubber 2007 397.0% 4.6%
annual reports.
2008 -261.2% -7.5%
2009 172.1% 5.6%
Cooper Tire and Rubber’s R&D Year R&D expenses R&D ratio
expenses 2005 -14.1% 0.8%
2007 -4.7% 0.8%
annual reports.
2008 4.5% 0.8%
2009 -3.4% 0.8%
4.10. Maxxis Company Overview
CHENG SHIN RUBBER

INDUSTRY CO., LTD
Fiscal year ended December 31st, 2009

Headquarters Yuanlin, Taiwan
Key figures Cheng Shin Rubber Ind. Co., Ltd. is engaged in the manufacture and distribution of
a whole range of tyres: radial tyres, automobile tyres, motorcycle tyres, tyres for
agricultural and industrial vehicles, as well as bicycle tyres.
Net consolidated sales €1.8 bn
Cheng Shin was founded in the 1960s and started out as a bicycle tyre producer.
Operating margin 20% The company’s five major factories are located in China, Thailand, Vietnam and
Taiwan.
Net profit margin 16.8% The company is the sponsor of the World Enduro Championship and the British
Drift Championship.
Staff 24,360
International presence The Americas

Asia
Europe
Middle East and Africa
New Zealand and Australia
5. Statistical appendix
Change in world market share Year Michelin Goodyear Bridgestone Others
unit: % 2000 18.9% 18% 20% 43%
2001 19.6% 18% 18.9% 44%
2002 20.1% 17% 18.8% 44%
Source: Xerfi Global. Primary source: Bridgestone
2003 19.9% 16.8% 18.3% 45%
2004 19.2% 17.7% 18% 45%
2005 18% 17.1% 17.9% 47%
2006 17.2% 16% 17.2% 50%
2007 17.1% 14.9% 16.9% 51%
2008 16.3% 13.2% 16.7% 54%
Consolidated bet sales and operating 2009 Net sales Operating margins
margins in 2009 Bridgestone 19,799.9 3.5%
unit: mn euros and %
Michelin 14,807.0 5.8%
Continental 20,100.0 9.8%
Source: Xerfi Global. Primary source: Company annual Pirelli 4,462.0 8.7%
reports. Yokohama 3,555.6 4.6%
Goodyear 11,699.8 2.3%
Sumitomo 4,027.7 5.2%
Hankook 2,902.3 12.1%
Cooper 1,994.6 13.5%
Natural and synthetic rubber Natural Synthetic

production by region North America 0 2,036
unit: tons
Latin America 228 601
Europe 0 3,112
Source: Xerfi Global. Primary source: IRSG Africa 446 60
Asia/Oceania 9021 6,274
Bridgestone’s net sales Year Sales Change in %
2007 22.8 11.1%
Source: Xerfi Global with Bridgestone annual reports. 2008 25.8 13.3%
2009 24.6 -4.6%
2009 19.8 -19.7%
Bridgestone’s revenues by activity Segment % of sales Change in % Change in %

Tyres 82.8% -18.0% -4.6%
Source: Xerfi Global with Bridgestone annual report Diversified Products 17.2% -27.1% -4.4%
Bridgestone’s revenues by region Region % of sales Change in % Change in %

Japan 26.2% -21.3% -8.1%
Source: Xerfi Global with Bridgestone annual reports. The Americas 43.3% -19.9% -6.3%
Europe 13.9% -23.6% -8.0%
Others 16.7% -12.5% 12.8%
Bridgestone’s operating profit Year Change in Operating profit Operating margin

2006 -10.8% 6.4%
Source: Xerfi Global with Bridgestone annual reports. 2007 31.0% 7.4%
2008 -47.4% 4.1%
2009 -42.5% 2.9%
Bridgestone’s R&D expenses Year R&D expenses R&D ratio

2006 9.2% 2.9%
Source: Xerfi Global with Bridgestone annual reports. 2007 0.1% 2.6%
2008 7.5% 2.9%
2009 -8.0% 3.3%
Michelin’s net sales Year Sales Change in %
2006 16.3 5.1%
Source: Xerfi Global with Michelin annual reports. 2007 16.8 2.9%
2008 16.4 -2.7%
2009 14.8 -9.8%
Michelin’s revenues by activity Segment % of sales Change in % Change in %

Passenger car and Light truck
55.9% -4.5% -4.1%
Source: Xerfi Global with Michelin annual reports. tyres and related distribution
Truck tyres and related
30.4% -17.2% -3.7%
distribution
Specialty tyre businesses 13.7% -12.0% 5.5%
Michelin’s revenues by region Region % of sales Change in % Change in %

Europe 45.6% -17.2% -4.1%
Source: Xerfi Global with Michelin annual reports. North America and 33.7% -3.2% -6.5%
Mexico
Other regions 20.7% -1.0% 8.6%
Michelin’s operating profit Year Change in operating profit Operating margin

2006 -10.8% 6.4%
2008 -47.4% 4.1%
2009 -42.5% 2.9%
Michelin’s R&D expenses Year R&D expenses R&D ratio

2006 9.1% 2.9%
2008 7.5% 2.9%
2009 -8.0% 3.3%
Goodyear’s net sales Year Sales Change in % Volume
unit: bn euros ; annual % change ; mn tyres 2005 12.9 -1.4% 226.4
2006 13.4 3.6% 215
Source: Xerfi Global with Goodyear annual reports. 2007 14.0 4.8% 201.7
2008 13.9 -0.8% 184.5
2009 11.6 -16.4% 167
Goodyear’s volumes by activity Segment % of sales Change in % Change in %

Replacement Units 76.6% -4.5% -5.5%
Source: Xerfi Global with Goodyear annual reports. OE Units 22.3% -22.6% -15.7%
Total -9.5% -8.5%
Goodyear’s revenues by region Region % of sales Change in % Change in %

unit: annual % change; share in % (2009/2008) (2008/2007)
North American Tyre 42.8% -15.5% -6.8%
Source: Xerfi Global with Goodyear annual reports. Europe, Middle East and
35.6% -20.7% 1.4%
Africa Tyre
Latin American Tyre. 11.1% -13.1% 11.5%
Asia Pacific Tyre 10.5% -6.6% 8.0%
Goodyear’s operating profit Year Operating profit Operating margin

2006 -32.5% 4.2%
2008 -34.6% 4.1%
2009 -53.7% 2.3%
Goodyear’s R&D expenses Year R&D expenses R&D ratio

2006 9.1% 2.9%
2008 7.5% 2.9%
2009 -8.0% 3.3%
Continental Tyre Divisions’ net sales Year Sales Change in %
2006 6.2 5.8%
Source: Xerfi Global with Continental annual reports. 2007 6.4 4.3%
2008 6.5 1.2%
2009 5.7 -11.4%
Continental Tyre’s revenues by activity Segment
unit: share in %; annual % change % of consolidated sales (2009/2008) (2008/2007)
Passenger and Light
23% 3.10% 1.00%
Source: Xerfi Global with Continental annual reports. Truck tyres
Commercial Vehicle
5% -3.10% 1.00%
Tyres
% of sales Change in % Change in %
Continental Tyre’s revenues by region Region
Germany 20% -1.1% -0.5%
Source: Xerfi Global with Continental annual reports. Rest of Europe 49% -1.0% 2.5%
NAFTA 20% 0.7% -1.1%
Asia 5% 1.0% -0.01%
Other Countries 5% 2% 0%
Year Operating profit Operating margin
Continental’s operating profit
unit: annual % change; share in % 2005 - 14.1%
2006 -4,2% 12.8%
2007 9,6% 13.4%
2008 -33,2% 8.9%
2009 -1,8% 9.8%
Year R&D expenses R&D ratio
Continental’s R&D expenses
2006 2.4% 2.4%
2007 4.1% 2.4%
2008 1.8% 2.4%
2009 1.9% 2.8%
Pirelli Tyre’s net sales Year Sales Change in %
2006 3.9 8.7%
Source: Xerfi Global with Pirelli annual reports. 2007 4.1 4.3%
2008 4.1 -1.4%
2009 3.9 -2.6%
Pirelli Tyre’s revenues by activity % of sales Change in % Change in %

Segment
Car tyres 63% 3% -1%
Source: Xerfi Global with Pirelli annual reports. Motovelo tyres 8% -1% 1%
Tyres for industrial vehicles 27% -2% 1%
Steel cord / other tyres 2% 0% -1%
Pirelli Tyre’s revenues by region % of sales Change in % Change in %

Region (2009/2008) (2008/2007)
Italy 9% 0% -1%
Source: Xerfi Global with Pirelli annual reports.
Rest of Europe 33% -3% -2%
North America 8% 1% -1%
Central and South America 34% 1% 5%
Africa, Asia, Pacific 16% 1% -1%
Pirelli’s operating profit Year Operating profit Operating margin

2006 3.9% 8.6%
2008 -29.8% 6.1%
2009 37.8% 8.6%
Pirelli’s R&D expenses Year R&D expenses R&D ratio

2006 0.7% 3.7%
2008 -2.0% 3.5%
2009 -8.3% 3.3%
Sumitomo Tyre net sales Year Sales Change in %
2006 3.3 8.1%
2007 3.6 11.1%
2008 3.8 4.7%
2009 3.3 -13.5%
Sumitomo Rubber revenues by activity Segment % of sales Change in % Change in %

Tyre 82.6% -13.5% 4.7%
Source: Xerfi Global with Sumitomo annual reports. Sports 12.5% -11.7% 24.8%
Industrial 5.1% -10.3% 1.1%
Sumitomo Rubber revenues by region Region % of sales Change in % Change in %

Japan 55.4% -11.6% 1.6%
North America 14.2% -13.2% 12.6%
Europe 4.5% -28.7% 24.2%
Asia 12.5% -10.2% 24.5%
Other areas 13.4% -16.6% 2.7%
Sumitomo Tyre operating profit Year Operating profit Operating margin

2006 -33.6% 6.1%
Source: Xerfi Global with Sumitomo annual reports. 2007 36.1% 7.5%
2008 -55.8% 3.2%
2009 42.1% 5.2%
Sumitomo’s R&D expenses Year R&D expenses R&D ratio

2006 8.0% 3.3%
2007 6.2% 3.2%
2008 6.0% 3.2%
2009 -6.9% 3.4%
Yokohama’s net sales Year Sales Change in %
unit: bn euros; annual % change ; 2006 3.4 11.4%
2007 3.7 11.1%
Source: Xerfi Global with Yokohama annual reports. 2008 4.2 13.3%
2009 3.9 -4.6%
2009 3.5 -19.7%
Yokohama’s revenues by activity Segment % of sales Change in % Change in %

Tyres 82.8% -18.0% -4.6%
Source: Xerfi Global with Yokohama annual report Diversified products 17.2% -27.1% -4.4%
Yokohama’s revenues by region Region % of sales Change in % Change in %

Japan 26.2% -21.3% -8.1%
Source: Xerfi Global with Yokohama annual reports. The Americas 43.3% -19.9% -6.3%
Europe 13.9% -23.6% -8.0%
Others 16.7% -12.5% 12.8%
Yokohama’s operating profit Year Change in Operating profit Operating margin

unit: annual % change; share in % 2005 - 4,9%
2006 -4,0% 4,2%
2008 -61,3% 2,5%
2009 67,5% 4,6%
Yokohama’s R&D expenses Year R&D expenses R&D ratio

unit: annual % change; share in % 2005 8,9% 3,2%
2006 0,6% 2,9%
2008 -0,0% 3,0%
2009 -13,0% 2,8%
Hankook’s net sales Year Sales Change in %
2007 1.7 9.1%
Source: Xerfi Global with Hankook annual reports.
2008 2.0 13.0%
2009 2.5 24.4%
2009 2.9 14.3%
Segment % of sales Change in % Change in %
Hankook’s revenues by activity (2009/2008) (2008/2007)
unit: share in %; annual % change Tyre 90.3% 17.6% 25.9%
Battery (Atlas) 7.2% -8.7% 32.0%
Source: Xerfi Global with Hankook annual report
Machinery (Daewha) 1.5% 41.6% -43.5%
IT Solutions (emFrontier) 1.0% 3.1% 16.7%
Region % of sales Change in % Change in %
Hankook’s revenues by region (2009/2008) (2008/2007)
unit: share in %; annual % change North America 19.7% 11.2% 34.6%
Source: Xerfi Global with Hankook annual reports. South and Central America 5.5% -24.4% 85.1%
Asia, except Korea 16.4% 0.3% 86.0%
Europe 22.0% 26.0% -14.1%
Local export 6.3 -25.8% 3.4%
Domestic 30 12.5% 4.1%
Hankook’s operating profit Year Change in Operating profit Operating margin
2006 -15.2% 8.3%
2007 5.0% 7.7%
2008 -24.3% 4.7%
2009 197.1% 12.1%
Hankook’s R&D expenses Year R&D expenses R&D ratio

2006 3.0% 2.3%
2007 12.0% 2.3%
2008 3.1% 1.9%
2009 10.9% 1.9%
Cooper Tire and Rubber’s net sales Year Sales Change in %
2007 1.8 26.5%
Source: Xerfi Global with Cooper Tire and Rubber 2008 2.1 13.9%
annual reports.
2009 2.0 -1.7%
2009 1.9 -3.6%
Cooper Tire and Rubber’s revenues by Region % of sales (2009/2008) (2008/2007)
region North America 69.6% -5.9% -3.2%
Europe 9.3% -14.3% -4.7%
annual reports.
Asia 21.2% 12.6% 6.8%
Cooper Tire and Rubber’s operating Year Change in Operating profit Operating margin
profit 2005 -60.2% 1.2%
unit: annual % change; share in %
2006 -279.9% -1.8%
Source: Xerfi Global with Cooper Tire and Rubber 2007 397.0% 4.6%
annual reports.
2008 -261.2% -7.5%
2009 172.1% 5.6%
Cooper Tire and Rubber’s R&D Year R&D expenses R&D ratio
expenses 2005 -14.1% 0.8%
2007 -4.7% 0.8%
annual reports.
2008 4.5% 0.8%
2009 -3.4% 0.8%
6. Information sources
International organisations
IRSG International Rubber Study Group

111 North Bridge Road, Singapore 179098
http://www.rubberstudy.com/
JATMA Japan Automobile Tyre Manufacturers Association

3-8-12 Minato-ku, Tokyo, Japan 1050001
http://www.jatma.or.jp
OICA Organisation Internationale des Constructeurs d’Automobiles

www.oica.net
Press
Tyre business 1 725 Merriman Road, Suite 300, Akron, Ohio 44 313-5 283
www.tyrebusines.com
Corporate websites
Bridgestone www.bridgestone.com
Michelin www.michelin.com
Goodyear www.goodyear.com
Continental www.conti-online.com
Pirelli www.pirelli.com
Sumitomo http://www.sumitomocorp.co.jp/english/
Hankook www.global.hankooktyre.com
Cooper www.coopertyre.com
Yokohama www.yrc.co.jp/english
ChengShin www.cst.com.tw
7. Annexes
7.1. Overview of the market 2009 sales
2009: a gloomy year for the industry

Global passenger car and light truck market in 2009
unit:% of change from 2008
Original equipment Replacement

The global economic slowdown gradually
caught up with the tyre industry, and
demand weakened in all economies, even Total
in the emerging markets, except China.
Replacement markets declined by an Africa Middle East

overall 3.2% in 2009.
Original equipment markets around the South America

world, except for China, fell by a steep
11.9% as carmakers slashed
production due to collapsing demand. Asia
Demand picked up in the second half
of the year, markedly in the mature
markets that had taken measures to Nafta
support the automobile industry
(offering incentives such as the “cash
for clunkers” program). Europe
-35% -30% -25% -20% -15% -10% -5% 0% 5%
Source: Xerfi Global. Primary source: Michelin
7.1. Overview of the market 2010 sales
2010 shows good signs of growth picking up its pace

Net sales - H1 2010
unit: 2010/2009 % change
Continental
The first half of 2010 confirmed the
predictions for growth in the industry. Net
sale figures illustrated a clear rebound in
the tyre markets: Continental’s revenues Sumitomo
increased by 29.5% in the first half of 2010
from the same period in 2009, Sumitomo’s
by 22%, Pirelli’s by 21.4% etc. and this
trend is expected to continue in the second Pirelli
half of the year, even though the pace of
economic recovery will vary from one
region to another.
Goodyear
While rising raw materials costs will have a

negative impact on second-half
Michelin
consolidated results and reduce operating
income, net sales are on the rise and the
industry has returned to profitability
Bridgestone
0% 10% 20% 30% 40% 50%
Source: Xerfi Global. Primary source: Company reports.
7.2. Demand Market breakdown
Demand is on the whole drawn by Asian countries

Global passenger car and light truck tyre market by regions in 2009 Global truck tyre market by regions in 2009
unit:% of volume unit:% of volume
South Africa
Africa America, Middle East,
Middle East, 9.5% 11.2%
Europe, 35%
7%
Europe,
14.2%
Latin
America, 6%
North North
Asia,
America,
Asia/ Oceania, America,
27%
50.0%
26% 14.9%
Source: Xerfi Global. Primary source: Michelin Source: Xerfi Global. Primary source: Michelin
Chart 1: Chart 2:
Passenger car and light truck tyre units sold in 2009 was As far as truck tyres are concerned, Asia makes for half of the
superior to 1,100,000,000. The main consumers were in the volumes sold globally, by large the industry’s biggest client.
European market, followed by Asia and North America.
7.2. Demand
Two-wheel demand is concentrated in Asia, while aircraft demand is driven by North America
Global two-wheel motor vehicle possession by regions in 2007 Global aircraft tyre market breakdown in 2008
unit:% of total fleet unit:% of volume
South Asia,
America, 5% 17.0%
Asia, 77%
Africa
Middle East,
3%
Americas,
Europe, 10% 52%
North Europe, 31%

America, 3%
Source: Xerfi Global. Primary source: OICA Source: Xerfi Global. Primary source: Michelin
Chart 1: Chart 2:
Demand for two-wheel vehicle tyres is driven by Asia, where Makers sell more than half of their aircraft tyres in the American
motorbikes offer enhanced mobility. As for the other markets, two- markets. Globalisation and international tourism growing at a fast
wheels are used especially for leisure. pace in the emerging countries will trigger a wider demand in
aircraft tyres.
7.2. Demand
Agricultural tyre demand poised for growth

Tractor and other agricultural machinery fleet in 2007 Tractor and other agricultural machinery fleet in ASIA- 2007
unit: % of the world fleet unit: %
Europe Others
34% 33%
Oceania Africa
1% China
2% 20%
Northern
America
17%
Central and
Asia India
South
41% Japan 26%
America
5% 21%
Source: Xerfi Global. Primary source: FAOSTAT Source: Xerfi Global. Primary source: FAOSTAT
The total number of tractors and other machinery used for agriculture is estimated to be at around 33.7 million.
The regional vehicle-inventory breakdown shows that most agricultural vehicles in use are in Asian countries and Europe,
respectively.
A closer look at Asia’s tyre demand shows that three Asian countries, namely India, China and Japan represent nearly 75% of the
market volume.
7.2. Competitive environment Profile of the leading companies
The crisis had a visible impact on company sales

Change in net sales of world tyre makers in 2005-2008(average growth) vs. 2009
unit: %
25%
In the fiscal year 2009, tyre makers 20%

recorded declines in sales and profitability. 15%
The global economic slump beginning at
the end of 2008 was accompanied by 10%
sluggish demand.
5%
All companies implemented various 0%
initiatives (reducing fixed costs, prioritizing
investment, adjusting production to -5%
minimise inventories) in order to offset the -10%
impact of the crisis, still, the business
environment significantly affected the -15%
performance of the top-notch players in the
industry. The exception was Hankook, who -20%
managed to maintain the same growth level -25%
in 2009 as before the crisis.
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2005-2008 average 2009
Operating margins affected by the recent economic slump

Operating margins of world tyre makers in 2005-2008 (average growth) vs. 2009
unit:%
16%
14%
12%
The only two companies that managed to
secure better margins in fiscal 2009, in 10%
spite of the sharp economic downturn, were
the American-based Cooper and South 8%
Korea’s largest tyre maker, Hankook.
6%
Continental, Hankook and Cooper have the
largest operating margins in the industry,
while Goodyear and Bridgestone’s 4%
operations in 2009 seem to have been
significantly impacted by the crisis. 2%
0%
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2005-2008 average 2009

7.2. Competitive environment Net sales
Sales are improving in the industry

Net sales in Q2 2010 (the period starting April 1st and ending June 30th)
unit: mn euros
7,000
6,000
In light of the latest financial results,
Bridgestone continue to be the world’s
leading tyre maker, followed by Michelin 5,000
and Goodyear.
4,000
In addition, all companies reported better
sales in the second quarter of 2010,
compared to the same period in 2009. 3,000
Improved results were impacted by:

2,000
Price/mix offsetting higher raw
material costs
Volume growth 1,000
Consumer original equipment recovery
stronger than anticipated
0
Commercial results strengthening
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2010 2009
7.2. Competitive environment Operating margins
Margins are recovering

Operating margins Q2 2010 vs Q2 2009 (the period starting April 1st and ending June 30th)
Yokohama
Goodyear
Bridgestone
Companies succeeded in significantly
increasing their margins, according to the
figures released for the period starting April Sumitomo
1st and ending June 30th: all of them
reported positive operating results.
Michelin
Hankook’s margins stood at 13%, second
only to Continental with almost 15%. In the Pirelli
meanwhile, Yokohama Rubber and
Bridgestone are back in black, after a
negative result in the same quarter of 2009. Hankook
Continental
-10% -5% 0% 5% 10% 15% 20%
2010 2009
Source: Xerfi Global. Primary source: company releases
7.3. Presence in main geographic segments Asia
Passenger car production is growing at double digit pace

Vehicle production in Asia by type
unit: thousands of vehicles
35,000
30,000
Although the Asian population is five times 25,000

larger than that of Europe and the US
combined, in Asia (except Japan), there are
20,000
only 90 cars per 1,000 people, compared
with 570 in Western Europe and close to
800 in the United States. 15,000
Having risen by nearly 15% a year on

average over the past four years, annual 10,000
passenger car sales in Asia is an
opportunity for increasing demand in the 5,000
replacement tyre market.
0
1998 2005 2009
Passenger cars Light commercial vehicles Heavy trucks Buses and coaches
Source: Xerfi Global. Primary source: OICA
7.3. Presence in main geographic segments
Asia: the extra legroom for growth

Asia vehicle production India and China vehicle year on year market growth
unit: number of vehicles unit: % change
35,000 60%
30,000 50%
25,000 40%
20,000
30%
15,000
20%
10,000
10%
5,000
0%
0
2004 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
China India Other China India
Source: Xerfi Global. Primary source: OICA Source: Xerfi Global. Primary source: OICA
While mature markets such as Europe, North America and Japan experienced double-digit car sales declines, India and China saw
sales increasing at an impressive rate (almost 50% in China and 12% in India).
Thanks to demand in fast-growing countries, the number of vehicles in the world is expected to increase by more than 20% by 2015
and to double by 2030.
More than half of the world’s automobiles will be produced in high-growth countries by 2014, with a subsequent effect on tyre
replacement markets.
7.3. Presence in main geographic segments India
Domestic players dominate the market

Share in passenger car tyre market Share in truck and bus tyre market
unit: % unit: %
Others, 4% Others, 3%
Birla,
Apollo, 19%
19% Apollo, 29%
Bridgestone
, 23%
Goodyear,
13%
Ceat, 13%
MRF, 19%
Ceat, 3% JK, 19% MRF, 19%
Source: Xerfi Global. Primary source: Apollo Source: Xerfi Global. Primary source: Apollo
In the main segments of the Indian tyre market, domestic producers (Apollo, MRF, JK Tyre, Ceat) hold the biggest share, while most
international top tier players have a feeble presence, except for Bridgestone and Goodyear in the passenger car tyre market.
In 2009, the majority of tyre manufacturers reported higher sales, driven by growth in both volumes and value. It is expected that the
industry will continue to witness healthy growth, however facing the challenge of rising raw material price.
The truck and bus segment is seeing a gradual rise in the proportion of radial tyres. While around 90% of the passenger car tyres are radial
in India, the T&B tyre is the next major category with surging demand for radial tyres.
7.3. Presence in main geographic segments South America
Mercosur region: growth potential is second only to China

South American vehicle fleet breakdown - 2009
unit: thousands of vehicles
4,000
3,500
3,000
South America's main trading bloc
Mercosur is set to attract significant new
2,500
investments from global automotive
manufacturers keen to benefit from the
region's strong economic growth prospects 2,000
and free trade tariffs.
1,500
Significant growth perspectives in the
market are envisaged by tyre 1,000
manufacturers, who have already begun
expanding their operation by increasing 500
plant capacity or building new plants.
0
1998 2005 2009
Passenger cars Light commercial vehicles Heavy trucks Buses and coaches
Source: Xerfi Global. Primary source: OICA
7.3. Presence in main geographic segments
Brazil is South America’s biggest and fastest growing market

Latin America and Brazil vehicle production Brazil vehicle market growth
unit: thousands of vehicles unit: % change
4,500
16%
4,000
3,500
12%
3,000
2,500 8%
2,000
1,500 4%
1,000
500 0%
0
2004 2005 2006 2007 2008 2009 -4%
2005 2006 2007 2008 2009
Brazi l Other Lati n Ameri can countri es
Source: Xerfi Global. Primary source: OICA Source: Xerfi Global. Primary source: OICA
Brazil is Latin America’s growth engine, accounting for 80% of production of vehicles, the biggest and fastest growing market with
car sales expected to continue to grow.
Brazil, which currently leads the bloc's production, will receive 90% of the investment, experts said, as car makers are keen to profit
from impressive sales forecasts driven by booming consumption rates (on the back of easy credit) and a stellar economic
performance.
Much of the investments will also go to improve the manufacturing quality in the bloc to keep the Mercosur product competitive with
imports.
7.3. Presence in main geographic segments North America
Goodyear is the leader in both passenger car and truck tyre segments
Passenger car tyre market share in North America 2009 Truck tyre market share in North America 2009
unit: % unit: %
Goodyear/
Continental,
Sumitomo, Bridgestone/
9%
21% Firestone ,
25% Yokohama,
Others, 26%
4%
Continental, Michelin, Others, 13%

6% 19%
Bri dgestone/
Fi restone , Goodyear, Michelin,
Cooper, 10% 18%
28% 21%
Source: Xerfi Global. Primary source: Continental Source: Xerfi Global. Primary source: Continental
The last 2 years have not been stellar ones for the North American tyre industry, and the sharp economic plunge had a huge impact on
tyre shipments and retail tyres.
The competition in the market is intense: the adjacent graph for the passenger car tyre segment paints the bigger picture for all other
segments (light truck, heavy truck, agricultural and off-the-road tyres) the top 3 leaders are the industry key players, medium size
players (Cooper and Goodrich) occupy approximately 10% of the market and roughly half of the market share is divided between
smaller players.
7.3. Presence in main geographic segments Europe
Growth potential is immense in Eastern European countries

Passenger car tyre market share in Europe 2009 Truck tyre market share in Europe 2009
unit: % unit: %
Goodyear/ Continental,
Sumitomo, 17%
Bridgestone Hankook, 3%
18% Bridgestone/
/ Firestone ,
Firestone , Pirelli, 5%
11%
19%
Michelin, Others, 2%
20% Pirelli,
8.0%
Goodyear/S
Continental, umitomo,
21% Others, 22% 20% Michelin,
34%
Source: Xerfi Global. Primary source: Continental Source: Xerfi Global. Primary source: Continental
In Western Europe as well as in other mature markets, tyre companies have streamlined their manufacturing operations towards high
performance tyres.
Around 10 % of the production is now located in new EU countries, such as Poland Slovakia, Romania and Slovenia, where the
potential growth in demand is higher than in the Western part of Europe.
7.4. Differentiation strategies Research and development
Innovation: essential for maintaining market share in developed economies

R & D expenses
unit: million euros
700
Companies such as Goodyear, Michelin
and Bridgestone have always led the
industry’s innovation path. Besides, the 600
value of resources they allocate for research
and development are far greater than those
of all other companies in the tyre business. 500
Tyre scientists are now exploring

“nanotechnology”. Its applications could 400
mean a significant drop in tyre weight,
which will translate to greater fuel
efficiency. Some of the materials 300
companies are currently working on include
nano clays, nano scale rubber gels and
smart materials that can be adapted to the 200
needs of a tyre.
100
Finally, micro-scientists in the industry
have even gone as far as saying that, by
using nanotechnology, tyres could be made 0
to last for the life of the car.
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High margins require intensive capital

R&D requirements by tyre segment
Although Asian tyre makers tend to be Passenger

referred to as simple “low cost" replacement
manufacturers they are becoming
increasingly aggressive in the export on World
classical tyre products. Presently, they are market
attacking other segments such as civil size Radial Truck
engineering tyres or OTR (off-the-road), (value)
the most lucrative products of the tyre Passenger
market, which require costly equipment and original equipment
pointed expertise. Agricultural Civil engineering
Bias Bias Radial Radial

Bicycle Motorcycle Aviation Motorcycle Aviation
R&D value
Source: Xerfi Global. Primary source: Michelin
7.5. Regional overview Asia-Pacific
Asia has the highest growth potential for the industry
CHINA INDIA JAPAN

MAIN COMPANIES MAIN COMPANIES MAIN COMPANIES
Hangzhou Zhongce Rubber Apollo Bridgestone
South China Tyre & Rubber MRF Sumitomo
Qingdao Double Star Tyre JK Tyre Yokohama
VEHICLE PRODUCTION VEHICLE PRODUCTION VEHICLE PRODUCTION

Passenger cars : 10.3 mn Passenger cars : 2.1 mn Passenger cars : 6.8 mn
Commercial vehicles: 3.4 mn Commercial vehicles: 0.5 mn Commercial vehicles: 1 mn
SHARE OF WORLD MARKET TRENDS 2010-2015 TRENDS 2010-2015 TRENDS 2010-2015
Passenger cars
TOTAL ASIA
Vehicles
Breakdown
Type of tyre per 1,000
of sales
Trucks inhabitants
Passenger car tyres : 305 mn

Radial: 52%
Commercial vehicle tyres: 54
Bias: 48%
67mn
7.5. Regional overview Latin America
Industry leaders have ample production facilities in Brazil
BRAZIL ARGENTINA
MAIN COMPANIES MAIN COMPANIES
Pirelli Fate
Michelin Pirelli
Bridgestone Bridgestone
VEHICLE PRODUCTION VEHICLE PRODUCTION

SHARE OF WORLD MARKET Passenger cars : 2.6 mn Passenger cars : 0.4 mn
Commercial vehicles: 0.6 mn Commercial vehicles: 0.1 mn
Passenger cars TRENDS 2010-2015 TRENDS 2010-2015
TOTAL LATIN AMERICA
Vehicles
Breakdown
Trucks Type of tyre per 1,000
of sales
inhabitants

Radial: 65%
Bias: 35%
15mn
7.5. Regional overview North America
North America remains a key market in the replacement segment
UNITED STATES CANADA MEXICO

MAIN COMPANIES MAIN COMPANIES MAIN COMPANIES
Goodyear Goodyear Tornel
Bridgestone Bridgestone JK Tyre
Cooper Michelin Goodyear
VEHICLE PRODUCTION VEHICLE PRODUCTION VEHICLE PRODUCTION

SHARE OF WORLD MARKET Passenger cars : 2.2 mn Passenger cars : 0.8 mn Passenger cars : 0.9 mn
Commercial vehicles: 3.4 mn Commercial vehicles: 0.6 mn Commercial vehicles: 0.6 mn
Passenger cars
TRENDS 2010-2015 TRENDS 2010-2015 TRENDS 2010-2015
TOTAL NORTH AMERICA

Vehicles
Trucks Breakdown
of sales
inhabitants
Radial: 96%
Bias: 4%
23mn
7.5. Regional overview Europe
Seeking growth, companies tap further into Eastern European markets
EASTERN EUROPE WESTERN EUROPE

MAIN COMPANIES MAIN COMPANIES
Michelin Michelin
Pirelli Pirelli
Continental Continental
VEHICLE PRODUCTION VEHICLE PRODUCTION

SHARE OF WORLD MARKET Passenger cars : 12 mn Passenger cars : 3.1 mn
Commercial vehicles: 0.3 mn Commercial vehicles: 0.1 mn
Passenger cars TRENDS 2010-2015 TRENDS 2010-2015
TOTAL EUROPE
Vehicles
Breakdown
Trucks Type of tyre per 1,000
of sales
inhabitants

Radial: 79% 550 (Western Europe)
Commercial vehicle tyres:
Bias: 21% 180 (rest of Europe)
16mn
7.5. Regional overview Africa and Middle East
A market that is increasingly explored
SOUTH AFRICA
MAIN COMPANIES
SHARE OF WORLD MARKET Michelin
Pirelli
Bridgestone
VEHICLE PRODUCTION
Passenger cars
Passenger cars : 12 mn
Commercial vehicles: 0.3 mn
TRENDS 2010-2015
TOTAL AFRICA AND MIDDLE EAST

Trucks Vehicles
Breakdown
of sales
inhabitants

Radial: 72%
Bias: 28%
16mn
Statistical framework
1353 codes of the ICB classification  This report analyses the tyre industry worldwide. The relevant ICB code is the 1353:
‘Commodity Chemicals’, which is included in the code 1350, ‘Chemicals’.
Data
Analysed financial data  The main indicators and ratios used for analysis purposes are the following:
 Net sales;
 Operating profit, which is the difference between operating revenues and

operating expenses;
 Operating margin, which the result of operating profit by net sales;
 Net income (profit or loss after operating expenses. taxes and exceptional
charges);
 Net margin, which is the result of net income by net sales.

Exchange rates  Financial figures mentioned in the report are stated in euro. The conversion rates
used for comparison purposes are the following:
 1USD= 0.78 EUR (January 2009– December 2009)
 100 JPY = 0.85 EUR (January 2009– December 2009)
 1000 KRW= 0.67 EUR (January 2009– December 2009)
 1 TWD = 0.02 EUR (January 2009– December 2009).
Methodological notes

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World Tyre Manufacturers

Market Analysis – 2010-2015 Trends – Corporate Strategies

Report code: 0XCHE09

This report was written under the

Other main contributors include:

Phase 5: Identification of the key conclusions

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 2

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 3

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 4

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 5

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 6

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 7

6. INFORMATION SOURCES 166

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 8

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 9

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 10

Source: Xerfi Global. Primary source: JATMA.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 11

Tyre production is the biggest 60% Natural rubber Synthetic rubber

Source: Xerfi Global. Primary source: International Rubber Study Group.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 12

Rubber and tyre manufacturing companies

Source: Xerfi Global.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 13

Michelin Goodyear Bridgestone Others

For most of the history of the tyre 100%

Source: Xerfi Global. Primary source: Bridgestone.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 14

As far as the top three are Tyres, chemical

Maxxis €1.8 bn Tyres

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 15

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 16

Main customers of the tyre Vehicle manufacturers or OEMs

Source: Xerfi Global.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 17

Enjoying rapidly increasing demand, Hankook is completing a plant expansion project

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 18

Source: Xerfi Global estimations. Primary source: annual reports.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 19

Prices for 215/70 R15 tyres in the United States

TYRE BRAND PRICE

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 20

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 21

The tyre global market is dominated by ‘The Big Three’

Tyres are largely a commodity, thus profitability depends on cost-efficient operations.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 22

Passenger car and light truck tyres together

Source: Xerfi Global. Primary source: companies annual reports.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 23

Tyres for the passenger car segment are predominant

Companies in the tyre industry essentially

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 24

The tyre industry relies mostly on natural and synthetic rubber

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 25

The industry sells tyres mostly for the replacement markets

Vehicle Manufacturers or OEMs

Source: Xerfi Global with companies’ annual reports.

World Tyre Manufacturers – Market analysis – Corporate strategies – October 2010 26

Tyre are sold through multiple distribution channels

Multiple efforts are made in order to TYRE

Customers can purchase a certain

multi-brand retailers, wholesalers (a

Source: Xerfi Global with companies’ annual reports.