Problems emerge at US$200m venture after mainland car sales growth slowed to 15.7 per cent last year
Michelin, the world's biggest tyre maker, has suspended production at its Shanghai joint venture after a drastic slowdown in sales in the mainland car market, according to its Chinese partner.
Shanghai Michelin Warrior Tyre had halted production for more than a month and was likely to extend that for another month or two, said a company executive from Shanghai Tyre and Rubber, the state-owned firm that holds 30 per cent in the US$200 million venture. Michelin owns the remainder. The joint venture was established in 2001 and had yet to show a profit.
Michelin executives in Shanghai and Beijing declined comment and referred all queries to their headquarters in France. Their spokesman Jacques-Philippe Hollaender said the company could not disclose financial information about a particular operation, but stressed that production at Shanghai Michelin had only 'slowed down because the market has slowed down'. He declined to specify the extent of the slowdown, or say when production was expected to return to normal.
'We are optimistic about the passenger car market this year and that car sales will return to a normal trend,' he said.
The venture's problems reflect continuing hard times at the more than three-year-old venture, which has yet to show a profit.
Michelin had hoped to take advantage of an expanding Chinese market in which the company has only a 5 per cent share.
