Yokohama Rubber to produce tyres in Russia, Brazil

TOKYO, July 28 (Reuters) - Yokohama Rubber Co 5101.T, Japan's third-biggest tyre maker, said it plans to produce tyres for passenger cars in Russia and Brazil from 2010 to meet rising demand in these fast-growing economies.

It will be the first Japanese tyre maker to start local production in Russia. Bigger rival Bridgestone Corp 5108.T already has tyre factories in Brazil.

Yokohama Rubber currently ships tyres to these countries from factories in Japan and the Philippines. But it wants to build local plants due to the strong business prospects in Russia and South America and also to avoid high tariffs on imported tyres, a company spokesman said.

“It makes more sense to produce tyres there and sell them directly in the region,” the spokesman said.

“We’ll keep shipping value-added products from Japan... (The plants) will start small and expand if and when sales increase,” the spokesman added.

Yokohama Rubber has set an annual sales target for passenger car tyres in Russia at 2.5 million for the fiscal year starting in April 2011, up 150 percent from its sales in 2007/08. In South America it will aim to sell 1 to 1.2 million tyres in the same year, up 25 to 50 percent from 2007/08.

The company will decide on the details of the plants, including capacity and location, by March 2009. Building two plants with an annual capacity of 1 million tyres each would cost about 10 billion yen ($93 million) overall, the spokesman said.

Yokohama Rubber’s main factory in Japan has an annual capacity of some 14 million tyres.

In the year that ended in March, Yokohama Rubber sold a little more than 1 million passenger car tyres in Russia and 800,000 to South America.

It declined to comment on total tyre sales for the year, but it added that the value of exports accounted for 44 percent of its total sales in fiscal 2007/08, up 4 percentage points from a year earlier. ($1=107.85 Yen) (Reporting by Risa Maeda; Editing by Hugh Lawson)