Importance of market areas equalizing

Nordic countries A strong position in the home market

Every year, approximately 10 million car and van tyres are sold in Finland, Sweden, and Norway. Approximately 6 million of these are winter tyres. Legislation in these countries mandates the use of winter tyres during the winter months. The Nordic countries accounted for approximately 44% of Nokian Tyres’ sales in 2015. The company is the market and price leader in the area. Nokian Tyres is the only local manufacturer and it has an extensive distribution network, including its own chain of 321 Vianor tyre outlets.

Central Europe - Determined development in the role of challenger

On European markets, excluding the Nordic countries, approximately 250 million car and van tyres were sold in 2015. Central Europe is the world’s largest market area for winter tyres – 11 times the size of the Nordic market. Approximately 69 million winter tyres were sold in 2015. As tyre markets are expanding and winter tyre legislation is becoming more widespread, Central Europe has become one of Nokian Tyres’ most important growth areas. Nokian Tyres tailors its tyres to address the needs of consumers in different market areas. The non-studded winter tyres designed for the winter conditions of Central and Eastern Europe and the summer tyres that are sold in the area differ clearly from the products sold by the company in its core markets. The company sells tyres in more than 30 European countries in addition to the Nordic countries, Russia, and the C.I.S. Central Europe accounted for approximately 26% of Nokian Tyres’ sales in 2015. The company has logistics and service centers in the area to serve the main markets at any time of the day. Growth in the retail channel was led by Vianor, which had a network of 337 outlets in the area at the end of 2015. The Nokian Tyres Authorized Dealer (NAD) network encompassed 1,239 stores in 19 European countries and in China.

Russia - Major potential, weak economic situation

Russia is a large market area where approximately 1.6 million new cars and approximately 33 million car and van tyres were sold in 2015. The demand for tyres in Russia is influenced by GDP growth, which is dependent on the price of oil, as well as purchasing power and consumer confidence. Economic growth in Russia was weak in 2015 due to a significant decrease in the price of oil, and the estimated GDP growth was -3.7%. Weakened household purchasing power directed sales away from premium products toward tyres in segments B and C.

Approximately 50% of after-market tyre sales are winter tyres. There is winter tyre legislation in Russia to use winter tyres in winter months but the enforcement is loose. However, the climate conditions in many parts of Russia make winter tyres essential in winter months anyhow.

Nokian Tyres is the market leader in the A and B segments and the largest manufacturer in Russia. In 2015, the company’s sales in Russia and the CIS were EUR 255.1 million, accounting for 17.4% of the overall sales of Nokian Tyres Group. Nokian Tyres has an extensive distribution network in Russia. The location of Nokian Tyres’ factories within Russia’s tariff barriers, coupled with strong brands and an expanding distribution network, provide the company with significant competitive advantage in the market.

North America - Growth through additional investment

In North America, Nokian Tyres’ strongest areas are Canada and the snow belt in the U.S.A. In these areas the yearly demand of winter tyres is approximately 16 million pieces. Total yearly tyre sales in the U.S.A and Canada, including summer and all-season tyres, is over 250 million pieces.

Nokian Tyres is a traditionally strong winter tyre brand in the northern parts of the continent. The company makes exclusive agreements with distribution partners in selected areas. Additionally, the Vianor chain has 76 tyre outlets in New England.