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Tariffs on passenger tires make waves for Aeolus

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Tariffs on passenger tires make waves for Aeolus

Aeolus Tyre Co. Ltd. is sponsoring a yacht in the Volvo Ocean Race (VOR), billed as the world’s toughest ocean race. As Mike Leverington, Aeolus general manager, United States, explained it, “No tire company has been involved in something like this. When you talk branding, you have to differentiate yourself from the pack or you are just a commodity. So by taking this on, we are differentiating our brand in sports marketing.

“It’s a unique angle, a thought outside the paradigm,” Leverington said. “It’s about exceeding everyone’s expectations.” And the core VOR enthusiast demographics are great, he pointed out:

  • 65% are older than 35 years old, with men making up 62%.
  • 80% hold managerial positions.
  • VOR fans are more positive toward sponsorship and are more likely to purchase products from brands that sponsor sports they like.
  • Average income of a VOR race fan is 67% higher than other sports fans, averaging $68,000.

“There are attributes that are parallel,” he said. “This race is intense. There’s a focus on excellence, a focus on quality. We’re now part of something that is going to grow. We’re not sponsoring college football or professional basketball teams. This is a way to get our name out there — and it stands out. “

The company is sponsoring the Dongfeng Race Team, owned by the Chinese manufacturer Dongfeng Commercial Vehicle Co. Ltd., a “long-standing, important partner” for Aeolus.

Plus Aeolus is named after the Greek “god of the winds.”

What does the future hold?

The VOR is a nine-month endurance race. It started in October 2014 with seven identical racing yachts. The ships will travel around the world covering more than 40,000 nautical miles. It has 10 legs — starting in Alicante, Spain, and ending in Gothenburg, Sweden.

The seventh leg stopped at Newport, R.I. It was there some of Aeolus’ largest customers got a taste of the race, tours of the yachts and close-up views of Pam Am (practice) races. The company also answered questions on its future.

MTD: Do you have a timetable for bringing passenger tires into the U.S.?

Jason Rothstein, Aeolus general manager: “Clearly we are eager to be able to come back into the U.S. in a meaningful way in passenger tires. We were a late entrant in this market simply because we concentrated on our strengths – which are truck and OTR tires. Since 2012, we’ve had rapid growth in our passenger tire business in every market in the world, including this one.

“Obviously, the tariffs stopped that in the U.S., given the fact that we were given the highest rate of tariffs, around 100%. At this point, it is prohibitive for us to sell passenger tires in this market. While we don’t have a specific timetable, we do have an action plan to focus on how to get back into this market.

“We are following the administrative process vigorously, in terms of dealing with the U.S. Department of Commerce and the U.S. International Trade Commission, to appeal our position in the top tariff bracket to get down to 30% to 33% like the other manufacturers. Then we will be able to get back in this market.

“At the same time, we’re also considering supply alternatives which would give us access to capacity outside of China,” he said. “That would allow us to supply our product and get back into the market here. The challenge is we’re not a price fighter, we’re a value brand — high quality, good price. So we need to find a partner outside of China that will uphold our standards. We’ve set the quality bar very high. We’re now traveling down dual paths, and whichever works out first will dictate how we get back into the market.”

MTD: Will you build a tire plant in North America?

James Yang, assistant general manager, global: “This is something the company has studied. It is hard to comment on the timing due to the tariff situation.”

Aeolus is “still committed to the U.S. market long term, with a focus on medium radial truck and radial off-the-road products in the short term,” said Yang. “Longer term, we are committed to being a leading global tire manufacturer supplying the U.S. for both consumer tires and commercial tires.” Aeolus also is planning to establish a U.S. subsidiary to improve support for Aeolus’ North American business.   ■

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