(Yicai) Nov. 25 -- International tire giants Michelin and Bridgestone have been adjusting their Chinese business in recent years to adapt to the fast-growing demand for new energy vehicles.

"The changes in China's automotive market are huge," Ye Fei, president of Michelin for China and Mongolia, told Yicai. "We didn't expect Chinese brands to rise so quickly to almost surpass foreign brands this year."

China is the world's largest automotive market. The NEV penetration rate exceeded 50 percent for the first time ever in August, according to data from the China Passenger Car Association. In the first 10 months of the year, NEV sales soared almost 40 percent to 9.75 million units from a year earlier, data from the China Association of Automobile Manufacturers showed.

Given the market environment, Michelin is partnering not only with traditional foreign carmakers but also with Chinese NEV startups, which have tighter requirements for tires' speed rating and technologies, Ye noted.

"Michelin was not satisfied that only one of its products could be applied to NEVs, so it started working hard to make all its tires suitable to meet NEV requirements," Ye explained.

"China is one of the few markets where Michelin has achieved rapid growth in the past 20 years and expects to continue this trend for 10 more years," Ye pointed out. "Therefore, the company has a rather heavy goal in the Chinese market."

If Michelin wants to achieve long-term development in China, it must hike its research and development capabilities and improve its ability to meet the needs of Chinese manufacturers, Ye said.

Michelin announced at the end of last year that it would increase the annual production capacity of its Shanghai plant to 9.5 million from 8.5 million tires by 2026.

Early this year, the French company said it would gradually convert its existing truck and bus tire factory in Shenyang to produce passenger vehicle tires. Afterward, the plant's annual output of passenger car tires will exceed 17 million units.

Bridgestone is constantly increasing investment in its Chinese factories because the local demand for tires with specific technical requirements for electric vehicles will continue to grow together with the NEV market, Augustine Pedrotti, general manager of Bridgestone China, told Yicai.

The company closed its truck and bus tire plant in Huizhou at the end of 2021 and the one in Shenyang at the beginning of this year because the recovery of the commercial vehicle tire market was slower than expected.

In June, the Japanese firm unveiled a plan to invest CNY562 million (USD77.6 million) over the next three years to increase the production capacity of high-end passenger vehicle tires of its Chinese factories.

Michelin has already promoted investments in Chinese production capacity projects for the next 10 years, including those at its factories in Shanghai and Shenyang, Ye noted, adding that thanks to a modular approach, these projects can also help further expand output at any given time in the future.

Bridgestone will keep hiking its investment in factories and retail networks in China to take advantage of the rapid development of the local market, Pedrotti said.

Editors: Tang Shihua, Futura Costaglione