Market focus on northern conditions


Russia – Great potential

Russia is a big market with 2.8 million new cars and 40 million car and van tyres sold in 2013. The special drivers for tyre demand, characteristic to Russia, are GDP growth deriving from the price of oil as well as interest rates for car loans. In 2013 the estimated real GDP growth was a modest 1.3%, but the growth is expected to speed up: average GDP growth for 2014–2016 is estimated at 3–4% a year.

Two-thirds of replacement market tyre sales come from winter tyres. Russia has no winter tyre legislation, but the climate conditions in Nokian Tyres’ operating region require the use of winter tyres during the winter months. Tyre market statistics is divided into three segments, where A equals premium products with highest prices, B-segment stands for mid-price tyres and C is for the low-end budget tyres. A and B segments are both estimated to grow 6–8% yearly, whereas C-segment growth rate expectation is 2–3%.

Nokian Tyres is the market leader and the biggest manufacturer of A and B segment tyres in Russia, especially in winter tyres. The company’s consolidated sales in Russia and CIS amounted 576.7 million euros in 2013, which formed 34% of the total sales of Nokian Tyres. Fluctuation of the Russian Rouble exchange rate gives an extra challenge for Nokian Tyres and other international companies to secure and optimize their financial result.

Nokian Tyres has an extensive distribution network in Russia. At the end of 2013 the Hakka Guarantee network and other retail partners working closely with Nokian Tyres in Russia comprised of nearly 3,300 tyre stores, Vianor shops, car dealers, and web shops.

Nokian Tyres’ factories located in Russia inside the customs borders combined with strong brands and an expanding distribution provides a significant competitive edge on the market.

Nordic countries – Strong position in mature markets

Annual sales in the Nordic countries total some 10 million tyres for passenger cars and vans, 6 million of which are winter tyres. The markets usually grow around 1–3% a year, and there are around 80 competing brands. The countries also have legislation that requires winter tyres to be used during the winter months.

Finland, Sweden and Norway accounted for some 36% of the sales of Nokian Tyres in 2013. The company is the market and price leader in the Nordic countries. Nokian Tyres is the only local producer in the area and has the best distribution network, including the own Vianor tyre chain of 271 stores.

Central Europe – Position improving in the largest winter tyre market

The size of the European market, excluding the Nordic countries, was approximately 230 million car and van tyres in 2013. Winter tyre sales amounted to roughly 69 million tyres. After a slower period, growth is expected again for 2014. Winter tyre segment is growing faster than the total market. Central Europe is globally the biggest winter tyre market – the potential is 12 times that of Nordic Countries.

With tyre markets expanding and winter tyre legislation becoming more common, Central Europe has become one of Nokian Tyres’ most important growth areas. Nokian Tyres customizes its tyres to meet the needs of consumers in different market areas. The non-studded winter tyres designed for Central and Eastern European winter conditions, as well as the summer tyres offered in the region, differ considerably from the products sold in the company’s core markets. The company sells tyres to 32 European countries, in addition to the Nordic countries, Russia and CIS. Central Europe accounted for some 22% of the sales of Nokian Tyres in 2013. The company’s market share was roughly 4% (9% in winter tyres), and the brand and price position improving in 2013.

The company further improved the product availability and distribution with the Ejpovice logistics and service centre providing 24 hour service to main markets. Expanding the retail channel was spearheaded by Vianor with a total of 238 stores in the area by the end of 2013.

North America – Focus on the winter tyre niche

In North America Nokian Tyres focuses on Canada and the USA snow belt area. Market potential for winter tyres there is twice as big as in the Nordic Countries. Winter tyre legislation in Canada supports the growth of demand.

Nokian Tyres has strong brand and product quality reputation in the North American winter tyre areas. The company has a policy of exclusive distribution partners in selected areas. Establishment of Vianor in New England has taken place with 50 tyre stores.