Car tyres

This business unit covers the development, production and marketing of summer and winter tyres for cars, SUVs and vans. Key products include studded and non-studded winter tyres as well as high-speed and ultra- high-performance summer tyres. Key markets include the Nordic countries, Russia and other CIS countries. Other significant market areas are Central and Eastern Europe, the Alpine region and North America. Winter tyres account for over 70% of the units net sales. Approximately 50% of summer tyres are high-performance or ultra-high-performance tyres. All tyres have been developed in Finland. Key products are manufactured at the company’s factories in Nokia, Finland, and in Vsevolozhsk, Russia, and they are sold in the replacement markets.

A year of structural changes

Determined product development work brought results also in 2009: Nokian Hakkapeliitta 7, the new studded tyre for Nordic conditions, won practically all car magazine tyre tests in the Nordic countries and Russia. The company’s Nordic studded tyres have always delivered superior performance in tyre tests, and this time was no exception. Proven performance also supports the company’s strategy of being the world’s best winter tyre manufacturer.

The market share of winter tyres showed growth in the Nordic countries, North America and also in Central and Eastern Europe. The net sales of Nokian passenger car tyres fell from the previous year, primarily as a result of declining sales in Russia. Tyre sales in Russia were hampered by the fifty per cent decrease in car sales, the customers’ large winter tyre carry-over-stocks and lack of financing. Meanwhile sales grew in North America and Central and Eastern Europe. Margins dropped due to the devaluation of currencies in key markets, due to weakened sales mix and a lower average tyre price.

During the first half of 2009, Nokian Car Tyres was able to prove its flexibility as the drastic decrease in demand created pressure to change the production structure. A change in the shift work system at the Nokian plant, temporary lay-offs and a permanent personnel reduction were regrettable but necessary measures that had to be taken to reduce stocks and to adjust production volumes to the lower demand. Streamlining and other cost-cutting measures reduced fixed costs, and in the second half, the increase in production in Russia and lower raw material prices clearly boosted profitability. The unit’s cash flow improved considerably from the previous year in response to investments cut to less than half year-over-year, as well as clear reduction in stocks and trade receivables.

Market information

Nokian Tyres estimates worldwide passenger car tyre sales to total some 1.1 billion tyres a year and the value of tyre markets to be around USD 140 billion. Original equipment installations account for some 28%. The markets are growing at an average annual rate of 2-4%. The strongest growth is registered in winter tyres, high-speed summer tyres and SUV tyres.

Nordic countries as a cornerstone

Finland, Sweden and Norway generate approximately 40% of Nokian Tyres’ net sales. Taking all products into account, the company is a market leader in Finland, and a top contender in Sweden and Norway. All three countries have a law that requires winter tyres to be used during the winter months.

Biggest growth potential in Russia

In 2009, Russia and CIS countries made 20% of the Group’s net sales. Nokian Tyres is the biggest manufacturer of premium tyres in Russia. Lower labour costs, raw material prices and energy expenses make tyre manufacture considerably cheaper in Russia compared to Finland and other Western European countries. Operations in Russia also entitle the company to tax relief and exempt it from import duties, which is a great competitive advantage.