Aeolus outlines plans for selling PLT tires in the U.S.

China’s fifth largest tire company, Aeolus Tyre Co. Ltd., wants to grow. To do so, the company has built a new plant to produce passenger and light truck radial tires, adding to its existing product lines of truck and OTR tires. And yes, exporting products is an important part to Aeolus’ strategy.

Chairman and General Manager Feng Wang told Modern Tire Dealer, “Our expectation is to be the benchmark of all Chinese tire companies.” Wang said the company is currently the 20th largest tire manufacturer worldwide, and he wants to get to the 10th position. The company had sales of more than $1.5 billion in 2011.

Aeolus exported $550 million in 2011 and is expecting an increase to $600 million this year. Wang says he expects $1 billion in exports in three years.

Aeolus has two plants in Jiaozuo, China, in the Henan Province. The newest plant is 100% radial. Aeolus is the country’s largest producer of OTR tires and the third-largest producer of truck and bus radial (TBR) tires.

Wang pointed out that Aeolus became the first Chinese tire manufacturer to begin 100% environmentally friendly production of tires in 2011. The company currently meets the European REACH-compliant standards for its tires and also touts its low rolling resistant radial truck tires.

During the 2011 celebration, Wang said, “There are no specific tire environmental protection laws or regulations in China. Most domestic tire manufacturers have not promoted green tires in the Chinese market until now. Aeolus has chosen to bear the cost to produce green tires because of our values and our initiative to undertake social responsibility.”

Aeolus is one of four tire companies owned in part by China National Chemical Corp. (ChemChina), a government-owned entity. The sister tire companies are: China National Tyre & Rubber Guilin Co. Ltd. (Torch), Double Happiness Tyre Industries Corp. Ltd. and Qingdao Rubber (Group) Co. Ltd. (Yellow Sea). Aeolus is the largest tire company in the group. Wang says ChemChina owns 42% of Aeolus.

While on a trip to China in September with dealers sponsored by Aeolus’ exclusive U.S. distributor of TBR and OTR tires, Alliance Tire Group (ATG), Aeolus announced its plans to bring passenger and light truck radial tires (PLT) to the U.S.

The company has hired industry veteran Mike Leverington, former director of marketing at Kumho Tire U.S.A. Inc., as its general manager for the U.S. The PLT lines are going to be sold directly by Aeolus in the U.S.

“Our level of participation with the PLT program, if any, has not yet been determined,” says Seth Walters, vice president of marketing and logistics for ATG.

Aeolus is in the start-up process with its PLT lines. The factory is currently producing 8,500 tires per day. Over the next two years, the company hopes to increase its capacity to 15 million PLT tires per year. Currently, 40% of Aeolus’ tires are exported, with 10% going to the U.S. market.

The first two lines of tires to be sold in the U.S. will be a V-, W- and Y-speed-rated summer tire in 35 sizes from 16-inch to 20-inch and 35 to 60 series; and an H-rated summer tire line in 22 sizes from 16-inch to 20-inch and 45 to 65 series.

Initially, the company will have seven SKUs for each of the tire lines.

Two light truck tire lines are planned for the U.S. as early as the first quarter of 2013 as the company ramps up production, according to Leverington. Aeolus wants to appeal to the market as a tier two or tier three player.

“We believe the general public is seeking exceptional value through price and high-value attributes. Consumers are interested in brands that are making an effort to establish earth-friendly manufacturing processes and eco-friendly products at very good values,” says Leverington. Aeolus will be promoted as being an alternative to tier one and tier two brands.

“In general, Aeolus takes great pride in the quality of the products that they sell in the market. Currently the Aeolus TBR and OTR lines have a very fine reputation and provide excellent value relative to the competition. Aeolus will continue with their philosophy to maintain the highest level of product possible. If the products do not meet the high standards of expectations, the product will be reworked until it does meet the expectations,” says Leverington.

For the short term, Aeolus will be a direct factory container program for PCR/LTR with the TBR portion still being sold through ATG. Leverington says that current ATG Aeolus customers will be given the first opportunity to handle the PLT product lines.

As the initial business grows, Aeolus plans to have U.S. warehousing. Strategically, Leverington says the distribution will be directed to regional wholesalers and retailers.

Aeolus will grow a U.S.-based sales team as its sales volume supports it. “We will have various kinds of marketing and merchandising tools and resources to support our distributors more on a one-to-one basis for the short- to mid-term,” says Leverington. “Obviously we will expand these efforts as our brand expands into the U.S. market.

“In addition, it is our plan to establish a U.S. subsidiary as early as 2013 to provide closer support for our new client base. Eventually we plan to establish additional distribution opportunities with a U.S.-based warehouse. Again, U.S. warehousing will be a function of our sales acceptance in the market.”

Leverington is well aware of perceptions.“How we are perceived when we start is how we will be remembered.”

Alliance Tire Group (ATG) is the exclusive distributor of Aeolus TBR and OTR tires in the U.S. ATG currently sells Aeolus’ full line of truck and bus radial (TBR) and radial OTR tires.

TBR represents 75% of the Aeolus business for ATG, with OTR holding down the other 25%. According to Seth Walters, vice president of marketing and logistics for ATG, ATG has come close to doubling Aeolus sales since taking on the line when it acquired GPX in 2010. GPX had previously been the exclusive distributor of Aeolus tires.

ATG, which has its own manufacturing facilities, positions the Aeolus brand as a “quality, second tier product for both TBR and OTR lines,” says Walters. Aeolus is the only TBR line that ATG handles. In total, Aeolus represents about 15% of ATG’s business in the U.S., says Walters.

Walters says ATG handles over 2,000 SKUs from Aeolus.

ATG took several of its customers, along with MTD, to China to visit the Aeolus factories in September.

One of the dealers, Maggie Buckholtz, vice president of purchasing and distribution for Donald B. Rice Tire Co. Inc. based in Frederick, Md., said, “The quality of the plants was much better than I expected to see.” She says her company positions the Aelous brand as “our tire of choice for our commercial center for those customers not buying a flag brand.”

Buckholtz says that having ATG as Aeolus’ U.S. distributor works out well for her company. “Their warehouses make a huge difference in the number of units we can sell.” (ATG has three warehouses in the U.S.) She also likes the security of buying through ATG. “Being based in the U.S., they are our security in