World’s top tyre manufacturer Bridgestone (5108) announced today that it was looking to increase to production capacity in Turkey. Bridgestone already owns 43% of Brisa, Turkey’s leading tyre manufacturer with a 30% share in domestic market. Its daily output capacity is 30,000 tyres.According to the Japanese financial Nikkei the new facility will manufacture 15,000 to 20,000 tyres per day, a 50% increase to the existing capacity, and will cost around US$300 million.
This is a surprise move by Bridgestone but probably one has been under review for a while by the company. Bridgestone’s main domestic rival Sumitomo Rubber (5110)has just broke ground for its brand new US$450 factory in central Anatolia. To put things perspective keep in mind that Bridgestone recently announced that along with Mitsubishi it was going to invest US$375 million in a a new factory in Zavolzhye, Russia, which will produce 12,000 tyres daily. It is also upgrading its facility in Hungary for 275 million Euros to produce 18,000 tyres a day- up 12,000 from the current level. So the capacity increase in Turkey is a major and strategic move.
Turkey has a vibrant economy. Total vehicle inventory is around 17 million and growing. Annual car sales are expected to be around 950,000 in 2014. Russia is expected to sell 3 million cars in the same year.