Nan Kang Rubber to Gain Steam on Japanese Auto Industry's Output Ramp-ups

Taipei, Jan. 4, 2012 (CENS)--With Japanese automakers actively ramping up output starting in the second half of 2011 to trigger more market demand for sedan tires in the country, Nan Kang Rubber Tire Co., a Taiwanese tire supplier focused on Japanese, European and U.S. markets, is expected to ride on the uptrend to fuel its business operations in 2012.

The report authorized by Japan Automobile Tyre Manufacturers Association Inc. (JATMA) indicates that affected by the massive earthquake hitting northeastern Japan on March 11, 2011 and months-long flooding in Thailand, Japanese automakers' demand for tires used in sedans, trucks and buses is estimated to decline 14% yearly in 2011.

However, as local automakers have gradually restored their factories to drive up output in late 2011, JATMA's report says, demand for new-car tires in Japan is estimated to surge 15% yearly in 2012, with an estimate of 40.226 million units specifically for sedans to be on demand.

Driven by automaker's output ramp-ups along with simmering needs of tire replacements, the report notes, overall market demand for tires, including ones used in various two-wheel and specialty vehicles, is expected to expand 2% year-on-year to 116.872 million units in 2012, a good news to Nan Kang Rubber.

Nan Kang Rubber is mainly engaged in making sedan tires, light truck tires, snow tires and SUV (sport utility vehicle) tires, with exports contributing around 90% to its overall annual revenue. At present, 55-60% of its exports go to Europe and America and 23% to Asia.

Dampened by seasonal depressions seen in European and American markets, the Taiwanese company saw its combined revenue drop to NT$1.4 billion in October and November, 2011. But, the company stressed that its sales revenue, which is estimated to remain sluggish in the fourth quarter of 2011, is very likely to rebound in the first half of 2012, when expected price drops of raw materials will help to improve the firm's gross profit rate.

Noteworthily, right after adding new capacity at its Taiwanese plant in the fourth quarter of 2011, the company has planned to set up new production lines at another plant in China, which is scheduled to start rolling in April, 2012. Then, the company will be capable of turning out 41,400 tires per day to better compete in the line.