Potential as well as risks
Russia is a large market with an estimated 2.5 million new cars and 39 million car and van tyres sold in 2014. The factors that affect tyre demand especially in Russia are GDP development, which follows the price of oil, and the interest rates for car financing. The Russian economy was in turmoil in 2014 due to the crisis in Ukraine and Crimea and the strong decline in oil prices, which resulted in zero GDP growth. The weakened household purchasing power caused a shift of sales from premium products to segment B tyres.
39 mill. sold passenger and van tyres per year
Winter tyres make up two thirds of aftermarket tyre sales. There is no winter tyre legislation in Russia, but the climate conditions in Nokian Tyres’ operating region warrant the use of winter tyres during the winter months. Nokian Tyres is the market leader and largest manufacturer of segment A and B tyres in Russia. Our total sales in Russia and the CIS countries in 2014 amounted to EUR 386.7 million, or 26% of the total sales of the Nokian Tyres Group. Fluctuation of the ruble exchange rates made it challenging for Nokian Tyres and other international companies to secure and optimize their financial result.
Nokian Tyres has an extensive distribution network in Russia. By the end of 2014, the Hakka Guarantee network and other retail partners who work closely with Nokian Tyres in Russia comprised of 3,600 tyre retailers, Vianor outlets, car dealerships, and online stores.
The company’s strong brands, expanding distribution network, and the location of its factories behind Russian tariff walls give Nokian Tyres a significant competitive edge on the market.
Focusing on the winter tyre niche
In North America, Nokian Tyres focuses on Canada and the US snowbelt region. There, the market potential for winter tyres is twofold compared to the Nordic countries. Canadian winter tyre legislation supports the growth of demand.
Nokian Tyres has a strong brand and a solid reputation for quality in the North American regions where winter tyres are used. In select areas, we make exclusive agreements with distributors. The Vianor chain has 69 outlets in New England.
The Nordic countries
Stable development continued
Approximately 10 million car and van tyres are sold each year in Finland, Sweden, and Norway. Some 6 million of these are winter tyres. Generally, the market grows 1–3% per year, and there are approximately 80 competing brands. The legislation in these countries requires the use of winter tyres during the winter months.
6 mill. sold winter tyres per year
The Nordic countries accounted for approximately 40% of Nokian Tyres’ sales in 2014. Nokian Tyres is the market and price leader and the only local manufacturer in the region. The company has an extensive distribution network, including its own Vianor tyre chain that comprises 294 outlets.
The largest winter tyre market
Approximately 230 million car and van tyres were sold in 2014 in the European market, excluding the Nordic countries. Central Europe is globally the largest winter tyre market – 12 times larger compared to the Nordic countries. Approximately 69 million winter tyres were sold in this region, and the winter tyre segment is growing faster than the total market.
69 mill. sold winter tyres per year
The expanding tyre markets and the adoption of winter tyre legislation in more countries have made Central Europe one of the most important growth areas for Nokian Tyres. Nokian Tyres tailors its products to suit the needs of consumers in different markets. Our summer tyres and non-studded winter tyres that are designed for the Central and Eastern European winter conditions are considerably different from the products that we sell in our core markets. We sell tyres to 32 European countries in addition to the Nordic countries, Russia, and the CIS countries. Central Europe accounted for some 24% of Nokian Tyres’ sales in 2014.
The Ejpovice logistics and service center serves the main markets around the clock. The expansion of the retail channel was spearheaded by Vianor, with a total of 288 partner outlets in the area by the end of 2014. The Nokian Tyres Authorized Dealer (NAD) network comprises 811 outlets in 14 European countries.