Tyres: a great way to start going green

Lanxess, a leading producer of synthetic high performance rubber, has been a strong partner to many global automotive manufacturers, and has worked with leading tyre makers to provide consumers with high-performance tyres that have positive environmental impact. Lanxess not only distributes speciality chemicals, but also provides expertise for manufacturers in applying these products to create the best possible quality tyres. This article by Christoph Kalla, Global Head of Marketing, Performance Butadiene Rubbers Business Unit, outlines the sector in the ASEAN, Thailand’s eco-car programme and tyre labelling.

THE GLOBAL business community is well aware of the phenomenal growth and success in Southeast Asia over the last decade. Gross Domestic Product (GDP) in the region has increased by roughly 280% in the ASEAN-5¹ from 2001 through 2011. Transportation networks and transport-driven resource consumption have developed growing concerns as a result of this. Prosperity has generated traffic on the roads, air and sea. From 2000-2010, sales of passenger automobiles in ASEAN member states have increased by an average of more than 14% annually². Notwithstanding the economic setbacks seen in 2011, partly caused by severe flooding in Thailand# and the anxiety over the Thai elections, the total number of cars on ASEAN roads was estimated to be 26 million in 2011 and is expected to rise to 55 million by 2020.

The current regional economic prosperity in Asia is seeing a rising middle class, and an increasing demand for mobility, leading to the consumption of passenger cars. It is predicted that car ownership in Asia is expected to grow further, especially in the cities e.g., Bangkok, Seoul and Shanghai^.

KPMG’s Global Automotive Executive Survey 2013 estimates that in the next 15 years, 85% of mobility growth is expected to come from the BRIC markets (Brazil, Russia, India and China). Of this, 36% is expected to come from China alone.

In Thailand, there is a similar upward trend, with car density in the country currently three times higher than the ASEAN average of 44 cars per 100 persons. This capacity is expected to increase by a third, reaching 4 million vehicles in the next few years.* This growth rate has further been fuelled by the ‘eco-car project’ that was launched in early 2007, by the Thai government.

Thailand’s Eco-car programme is a great start
Aimed at becoming the champion of the “eco-car” market in this region by 2015, the scheme looks at promoting the manufacture of environmentally-friendly automobiles that can boost exports and industrial competitiveness of Thailand.

Under this scheme, a tax rebate of 17% for eligible eco-cars was introduced for manufacturers; of these cars who in addition could enjoy a tax exemption on corporate tax for up to eight years. Further benefits in this scheme include a tax exemption on the import duty for machinery and equipment and up to 90% reduction in the import duties on raw materials and finished parts for two years. Manufacturers who wish to apply for the scheme have to manufacture cars with engine capacities below 1,300 cc, considered to be energy efficient.

Additionally, a manufacturer must guarantee to invest more than 5 billion baht in eco-car production and produce more than 10,000 vehicles annually in order to enjoy the tax incentive.

This project has successfully led to an increase of some 700,000 vehicles on the Thai roads within a few years. In 2010, only 60,000 of the vehicles manufactured in the country were eco-cars; that number jumped to 259,000 in 2011 and reached a record high of 430,000 in 2012³.

What has emerged from these developments is a need for the country to maintain a balance between the demand for growing mobility alongside environmental sustainability – a challenge for both industry and consumers.

In Thailand alone, where some 4 million vehicles are expected to hit the roads by the end of this decade, it is not only essential for the country to adapt a sustainable urban lifestyle, but to also provide real solutions to cut down CO2 emissions and noise pollution. This is where “green tyres” – low-rolling resistant tyres contributing to fuel efficiency – could add great value to sustainable mobility.

Tyre labelling shaping the Green Tyres phenomenon
According to a research done by Germany’s Technical University of Munich, tyres on passenger vehicles have a significant impact on fuel consumption and the environment. Tyres account for every fourth filling of petrol in cars and every third filling in commercial trucks, and fuel consumption is impacted by the rolling resistance of one’s tyres used.

Energy loss in tyres is caused by the heating and deformation of tyres, as they work hard to brake and grip the road. Specially engineered “green tyres” can offer consumers increased durability and enhanced safety with less rolling resistance and help improve fuel consumption with reduced energy loss. It is estimated that 20-30% of fuel consumption and rolling resistance is produced by tyres, and about approximately 24% of a vehicle’s CO2 emissions output is related to tyres.

“Green tyres” for example can reduce rolling resistance by approximately 30%, and this could lead to reduced fuel consumption of about 0.5 l per 100 km or alternatively 5-7%, to bring about reduced CO2 emissions or about 1.2 kg per 100 km. Just by choosing ‘green tyres’, passenger car drivers could possibly lower their fuel consumption by some 7-8%, and trucks by about 10-11%. These tyres can also deliver a shorter braking distance at 80 km/hour by up to 21 m***.

Aimed at helping consumers make informed choices during tyre purchase, the European Union (EU) introduced the tyre labelling legislation in November 2012. Tyre labelling provides a classification for tyres that measures three key performance parameters: fuel efficiency (related to rolling resistance), wet grip (impacting safety) and external noise level.

These significant performance parameters contribute greatly in impacting fuel consumption and carbon emissions. Hence, the relevant information is adequately presented on the tyre label to show consumers the economic and ecological benefits of their tyre choice. In other words, the European consumer is now made more aware of how “green” and efficient their tyres are. With tyre labelling, the power is now in the consumers’ hands to make informed purchasing decisions to save fuel and money. With the success of the EU’s tyre labelling legislation, many countries have already followed suit in hopes of shrinking domestic fuel consumption, cutting down CO2 emissions and also raising the standards for tyre safety.

In the Asia Pacific region, there is already action taken by countries to go the same direction. As of December 2012, South Korea legislated tyre labelling with the aim of reducing their CO2 emissions by 30% by 2020.

Japan has also initiated the tyre labelling initiative on a voluntary basis since 2010, and this has been championed by the Japan Automobile Tire Manufacturers Association (JATMA), an ndependent conglomerate formed by Japanese tyre makers. In the case of Europe and Korea, where tyre labelling legislation is in effect, the display of such labels are now mandatory at the point of sale. In Japan, due to its voluntary approach by tyre manufacturers,  consumers will only see such labels on tyres of participating tyre makers.

While the above markets have detailed tyre labelling in place, China, the biggest automotive consumer in Asia, has vocalised its aim to reduce its CO2 emissions by 40-45% by 2015 via tyre labelling in the near term.

At least 25% of the tyre manufacturers in China have been tasked to produce fuel-efficient and low carbon emitting “green tyres” by this coming mid-decade. India has also publicly announced that it is seeking to reduce the country’s CO2 emissions by 20-25% by 2020, and Tyre labelling has become an important topic by many governments globally. With tyre labelling, we may well see more “green tyres” in the market.

However, more importantly, it is clear that there is now a new awakening and focus on environmental stewardship globally.

In 2015, it is hoped that the Assembly of the ASEAN Economic Community (AEC), when formed, will help strengthen Thailand’s position as an automotive hub for the region. Thailand will hold a certain responsibility in manufacturing the best possible quality automobiles and automotive parts, including tyres. Adhering to such stringent global manufacturing standards will be perhaps it is a matter of time when other countries with overcrowded cities and traffic woes in ASEAN follow suit.

essential in Thailand’s bid to stay competitive in the global market while meeting consumer demand for environmentally friendly goods. It will be then imperative for Thailand not to fall behind on technology and instead stay on course with consumer and industry trends and developments, i.e., tyre labelling. There is no doubt that the implementation time in different regions and different countries will differ due to local political and social reasons. However, the EU example has definitely influenced other regions and countries to follow suit. A good example is Brazil.

The topic of tyre labelling kick-started in the Brazilian governmental discussions shortly into the year 2010, As of mid-2012, the government has confirmed that it will follow the EU’s blueprint on tyre labelling aiming for  implementation before 2015 – approximately about half the time the EU had taken to get it legislated. Based on the introduction and adoption and response to its eco-car policy, Thailand, too, is ready for a tyre labelling legislation foreseeable anytime in the next 3-5 years. This can be further propelled by the automotive industry taking the voluntary approach as seen in Japan, or the legislative route approach as taken by the EU.

Will Thai legislators take the next step toward sustainable solutions to further the success of their eco-car programme? Only time will tell.