1. In general, tires refer to "steel or rubber rings that cover the outer circumference of wheels." In this report, tires refer to the "inflated tires" used by automobiles.
   
   
2. Tires are classified as follows:
   1. Tires for automobiles (passenger cars, compact trucks, pickup trucks, large trucks and buses);
   2. Tires for motorbikes (motor cycles, scooters, low-pressure special tires);
   3. Tires for industrial vehicles and construction vehicles (industrial vehicles and construction vehicles);and
   4. Tires for agricultural machinery (agricultural machinery).

   Tires for bicycles, which do not use bead wires, are excluded here.

3. In 1888, J. B. Dunlop of the UK developed the world's first inflated tires. Although they used rubber for the inner tube from the start, leather was used for the cover. Because leather wore out so fast and tires were so easily punctured, they soon replaced it with rubber coated fabric, simultaneously achieving wear resistance and elasticity. In the U.S.A. in 1896, Goodrich developed the first canvas automobile tires. In 1905, they had the idea to insert bead wires into the bead section, and in 1912, carbon black was first employed to reinforce tread rubber. The present screen-like tire cords were first used in 1915. As cord materials changes from cotton, to rayon, nylon, Tetron, or steel, the strength of tires has been dramatically improved. For treads and tubes, natural rubber was replaced by synthetic rubber after the Second World War. Recent years have seen the debut of tubeless tires, which do not lose pressure even if punctured by nails, and radial tires whose carcass cords are arranged at 90 degrees to the turning direction. As automobiles develop, tires develop too.
   
   
4. By region production of automobile tires is (unit:1 million):

   	1994	1996
   North America	270	289
   Latin America	57	59
   Europe	225	244
   Africa	12	12
   Asia and Oceania	256	296
   Former Communist bloc	100	118
   Total	920	1,018

   By country production is:

   	1994	1996
   U.S.A.	243	255
   U.K.	30	31
   France	58	63
   Germany	46	48
   China	73	86
   Japan	136	165

5. Production and sales of automobile tires in Japan are (unit:1,000 pcs.):

   	1988	1992	1997
   Production	163,064	166,203	171,963
   Sales	162,675	164,025	173,867
   (For new cars)	(63,422), 39%	(58,901), 36%	(50,135), 29%
   (For retailing)	(59,423), 37%	(67,676), 41%	(74,286), 43%
   (For exports)	(39,830), 24%	(37,448), 23%	(49,446), 28%

   The above figures show that in 1997, sales for new automobiles suffered a major setback due to the slumping economy, whereas sales for repair and exports increased due to greater replacement demand and the cheaper yen, respectively. For good or ill, economic conditions affect the tire industry somewhat later than other industries, due to changes in automobile ownership.

6. Imports to Japan are (unit:1,000 pcs.):

   1988	1992	1997
   11,653	14,315	16,747

   As this shows, they are on the increase. By country tire imports are (unit:1,000 pcs.):

   	1988	1992	1997
   U.S.A.	4,490	5,027	6,879
   Italy	648	863	1,181
   Germany	1,206	907	636
   France	287	675	943
   Spain	693	663	832
   Austria	1,490	1,969	96
   Korea	968	1,010	959
   Taiwan	449	1,171	2,570
   Others	1,422	2,030	2,651

   One thing that should be taken notice of concerning imported tires is that not all the imports are used in Japan:for example, Japanese automobile manufacturers are often requested to use Goodyear tires for their exports to North America. Tires used for automobiles shipped to North America are also included in the figures for imported tires. Seventy percent of imported tires are re-exported, with the remaining 30% used in Japan.

7. In 1997, by region exports were (unit:FOB 1,000 dollars):

   Southeast Asia	517,154	( 15.9%)
   Middle East	477,897	( 14.6%)
   Europe	677,402	( 20.8%)
   North America	879,854	( 27.0%)
   Latin America	238,915	( 7.3%)
   Africa	208,945	( 6.4%)
   Oceania	261,320	( 8.0%)
   Total	3,261,487	(100 %)

   This is one of the rare industries in Japan that exports such a large quantity.

8. Domestic sales/exports/imports in 1997 were (unit:1,000 pcs.):

   Domestic sales	124,421	(65%)
   Exports	49,446	(26%)
   Imports	16,747	( 9%)

9. In Japan, there are six automobile tire manufacturers:Bridgestone, Yokohama Rubber, Sumitomo Rubber Industries, Toyo Tire & Rubber, Ohtsu Tire & Rubber and Michelin Okamoto Tire. Whereas only two manufacturers each have survived in major producing countries, there are three times as many manufacturers in Japan. In 1965, Bridgestone became the first Japanese tire manufacturer to go overseas when they invested in Australia. Other manufacturers followed suit and have made investments, merged with local companies and established joint ventures. However, tires produced overseas are mainly for consumption in the host country or its neighbors, and few are exported back to Japan except for some special products. Most of the tires produced overseas are for general quality. High- class tires are produced in Japan.
   
   
10. Tires made in Japan feature uniform quality. Though they are priced higher than others, they offer high performance not only for their first life, but for the second and third life after recycling. 11. Although tire manufacturers do exist in Southeast Asian counties, their production and scale of operation are so small that they barely affect the global tire industry. 12. Each manufacture buys PL insurance. It is a must for exports to North America. We often hear that compensation is demanded for any damage caused by problems. In Japan, some 12,000 tires per year are found to have flaws. Ninety percent of these are damaged due to maltreatment, 0.5% due to production errors, and the remaining 9.5%, due to causes which are difficult to classify.
    
    
11. Distribution channels for automobile tires are:
    1. For new cars:Manufacturers -> Automobile manufacturers;
    2. For retail sales:Manufacturers -> Dealers -> Stores (tire specialty stores, car dealers, gas stations, garages, car accessory shops, etc.) -> Large users, users using automobiles for business, users with automobiles for personal use (In recent years, an increasing number of manufacturers bypass dealers and stores and sell directly to users.);and
    3. For exports:Manufacturers -> Direct exports or indirect exports (via trading companies).
       
       
12. In 1997, 91% of tires were recycled. There are basically two methods of recycling:
    1. Recycled as they are or recycled after processing (40%) (Exported for recycling as recapped tires, etc.:17%, Rubber powder for recycled rubber:12%, for recycled tires:8%, Others:3%)
    2. For heating fuel (51%) (for cement firing, etc.:27%, for medium and small boilers:12%, for metal scouring and paper manufacture:7%, for tire manufacturers' factories:4%, for power generation for other than tire manufacturers' factories:1%)

    Although 91% are recycled, the problem is the remaining 9%. If old tires are abandoned on the street, they often catch fire, or collect rainwater, giving rise to mass outbreaks of mosquitoes, creating unsanitary conditions. A further increase in the recycling ratio is needed.

13. So far, Japanese tire manufacturers have been constantly required to slash costs and make technical breakthroughs. They will be required to make still further cost reductions. Because of the huge amount of initial investment, no new manufacturers are likely to enter the market. To reduce logistics costs, which typically represent 7-8% of their costs, all tire manufacturers are making desperate efforts to establish common warehouses, use common transportation and abolish the use of wrapping. Further automation is expected in production lines, but more automation in the molding section will be a very slow process. The future of imported tires depends solely on exchange rates. If the yen appreciates, they will have a good chance. At a rate of \120 against the U.S.A. dollars, the percentage of imports would be around 14%.

All figures courtesy of the Japan Automobile Tire Manufactures Association, Inc.