On August 9, Shandong Linglong Tire issued an investment announcement for its overseas (Serbia) investment expansion project, marking another important step in Linglong Tire's overseas layout and another milestone for domestic tires to enter Europe.
Linglong Tire invests 4.6 billion yuan to develop OTR tires
The announcement shows that the total investment of the project is about 4.62 billion yuan, and it is planned to be constructed on the existing land in the factory area, including civil engineering, equipment purchase, 24MW photovoltaic power generation project, etc. The project funds will be raised through self-raised funds and bank loans.
After the Serbia project is completed, the annual production of various types of high-performance radial tires will reach 1.1 million sets, including 800,000 sets of all-steel radial tires, 50,000 sets of engineering radial tires, 150,000 sets of agricultural radial tires, 100,000 sets of retreaded tires, and 6,000 tons of liquid recycled rubber.
From the perspective of production capacity structure, the main investment products of Linglong's expansion project are OTR tires, including 50,000 sets of engineering radial tires and 150,000 sets of agricultural radial tires, demonstrating Linglong's determination to expand the off-road tire market.
At present, the semi-steel project of the first phase of Linglong Serbia factory, which produces 13.62 million sets of high-performance radial tires (including semi-steel, full-steel and off-road tires), is still being accelerated. According to Linglong's recent disclosure, the factory's truck and bus tire production capacity has reached the first phase, and the semi-steel production capacity will reach 12 million sets by the end of June next year. Linglong said that the expansion project plans to complete preliminary work by the end of December 2024, start construction in January 2025, and be completed and put into use by the end of December 2030. The construction period is 6 years.
After production, the expansion project will achieve an average annual operating income of approximately RMB 2.01 billion and an average annual net profit of RMB 880 million.
Aiming at Europe, Linglong extends its original equipment territory
On March 30, 2019, Linglong Tire held a launching ceremony for its Serbia project, marking the first time for a Chinese tire company to build a factory in Europe. So far, it is the only Chinese tire company that dares to build a factory in Europe.
In addition to the friendly political environment and preferential policies between the two countries, Linglong Tire also has the strength to launch an attack on this high-end market.
First, Europe is one of Linglong Tire's main export markets. The Serbia investment and expansion project will further expand the European market and increase the market share of Linglong products.
Linglong's confidence also lies in its leading position in the original equipment market. It is reported that Linglong tires have passed the supplier review of many European automobile manufacturers such as Volkswagen, Audi, BMW, Renault and Nissan.
Among them, Linglong Tire is the first Chinese local tire supplier of Volkswagen Group. The expansion of the existing plant area of the first phase of the project in Serbia is also aimed at accelerating the progress of cooperation with the German Volkswagen Group.
The establishment of this project not only further expanded Linglong's delivery time to Volkswagen factories in Germany, the Czech Republic and other European countries (Volkswagen requires delivery within 72 hours), but also promoted the construction and improvement of overseas marketing channel networks and promoted the company's overseas supporting business.
It can be said that after Linglong achieved a leading position in the domestic original equipment market, it has turned its attention to European automakers, becoming a pioneer in high-end supporting domestic tires.
In the long run, the implementation of Linglong Tire's Serbia project will enhance its global influence in the off-road tire sector, accelerate its advancement into the high-end field in the original equipment market, and significantly improve its overall competitiveness.
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