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Emergent Ventures India (EVI) & Indian Technical Tyre Advisory Committee (ITTAC)
2010
Emergent Ventures India (EVI) & Indian Tyre Technical Advisory Committee (ITTAC)
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2010
Contents
Foreword .......................................................................................................................... 4 1. 2. 3. Introduction: Regulatory & Market landscape ........................................................ 6 Indian tyre industry & exports ................................................................................. 7 European emission reduction goals & tyre labeling regulation ............................... 9 3.1. 3.2. 3.3. 4. Noise Pollution Regulation ............................................................................... 9 Wet Grip Regulation ......................................................................................... 9 Rolling Resistance........................................................................................... 10
Compliance: EU tyre labeling ................................................................................. 10 4.1. 4.2. 4.3. 4.4. 4.5. Scope of the regulation .................................................................................. 10 Compliance timelines ..................................................................................... 11 Certification procedure .................................................................................. 11 Verification & Enforcement ........................................................................... 11 Testing procedures ......................................................................................... 12 Noise Pollution ....................................................................................... 12 Rolling Resistance Test ........................................................................... 12 Wet Resistance test ................................................................................ 12
Compliance cost & Options ............................................................................ 13 Additional Requirements & Fuel Savings calculator ...................................... 13 Overall Action Plan: 3C ................................................................................... 13 Compliance > .......................................................................................... 14 Communication > ................................................................................... 14 Capacity > ............................................................................................... 15
Case in point: How are automobile & tyre manufacturers acting on the issue ..... 16
Emergent Ventures India (EVI) & Indian Tyre Technical Advisory Committee (ITTAC)
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Foreword
I am delighted to present this Tyre Industry Labeling/ Certification Regulation: Compliance & planning Roadmap. Transportation is a very dynamic sector of economy. It is ever evolving and therefore requires all related industries like tyre industry to adapt to the changing dynamics. Today there is a growing global movement to make transport industry more fuel efficient and safe at the same time. These standards are increasingly being adopted in various geographies of the world and will converge towards a common global standard. The recent European tyre labeling regulation is a case in point. Indian Tyre industry appreciates the developments and therefore looks forward to upgrade its capacity to address such issues. They are increasingly focusing on international markets like Europe and are interested to upgrade themselves to fully comply with global standards. European tyre regulations would be important for the industry in this context. This report gives an introduction to the recent European tyre regulation. It lays down basic requirements of the regulation and aims at giving the reader a basic understanding of this regulation. I believe that these regulations would also help the manufacturers communicate to the consumer effectively about the quality of their products Lastly, Industry level cooperation to build capacity within industry to comply with these new regulations will also help the exporters keep the costs of compliance low. I hope that this guide will be of value to tyre industry to take further action.
The recent economic growth in India has fuelled the growth of auto industry, of which tyre industry is an integral part. The Indian auto and tyre industry are increasingly competing at the global level. In that backdrop, the recent EU regulations on fuel efficiency and safety have emerged as important driver for the tyre industry to adopt better standards for manufacturing the tyres for European markets. While the report presents a basic understanding about the regulations, it also discusses that how EU regulations can help in setting higher standards for the tyre industry in developing and developed world. The European Union has passed these regulations as part of policy initiatives on environmental sustainability in transportation sector. These regulations need contemplation from the tyre industry. I have had an extensive involvement in the development of energy efficiency labelling programs for consumer appliances and to me the auto sector seems to be a natural next step in achieving better energy standards. Our team has been tracking the EU tyre regulations since the onset of their formulation and I hope that this report should not only be helpful in highlighting the key facets of the regulations but will also help the tyre industry in setting targets to comply with new EU regulations.
Sanjay Dube Vice President, Sustainability & Climate Value Advisory, Emergent Ventures International
Emergent Ventures India (EVI) & Indian Tyre Technical Advisory Committee (ITTAC)
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Executive Summary
Today our global economic markets are undergoing rapid integration and tyre industry is no exception. The Indian tyre manufacturers are increasingly exploring international markets and the European market has emerged as an important export market. Global markets in transportation and related goods are also witnessing increasing regulations to address environmental and fuel efficiency concerns. Europe is at the forefront of such regulatory initiatives. Compliance with such market regulations and appealing to consumers in these countries would require that exporters to these markets upgrade themselves accordingly. Recently, European tyre labelling regulation has been introduced in European markets. The regulation aims to lower carbon emissions, noise pollution and save fuel through use of quality tyres. Initially the program only requires that manufacturers benchmark and certify their tyres on three performance parameters: Noise Pollution, Rolling Resistance and Wet Grip. The minimum quality standards based on these would be made more stringent over time. Along with labeling, the regulation also requires that the supplier makes such information available to the consumer easily and hence requires the manufacturer to communicate its status on these parameters too. This is expected to add a new dimension to the regulation, wherein the regulation takes the program beyond just labeling and encourages suppliers to engage with consumers on these issues. Therefore the issue of labeling regulation requires attention beyond the technical adherence on softer issues of communication and consumer engagement. This paper focuses on the EU labeling regulation issues. It describes what the new EU regulations are. It briefly discusses the Low Carbon Transport policy goal that forms the background for this regulation. It also describes what kind of tyres is covered and which types are exempted. What parameters are required to be reported on the tyre label, what types of test would be required to quantify these parameters. It also briefly mentions the cost that could be incurred to undergo for these tests. Finally, the paper suggests three step procedure based on 3Cs that exporters can adopt to successfully comply with the compliance and effectively communicate to consumers to benefit from the compliance.
Emergent Ventures India (EVI) & Indian Tyre Technical Advisory Committee (ITTAC)
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1.
Introduction: Regulatory & Market landscape
Changing Global Business Environment
Today business environment around the world is undergoing a slow metamorphosis. The metamorphosis is being brought about by a set of forces around the world. In a recent global survey-The great rebalancing & Pricing the planet emerged as the two among the five most important factors that will change our global business environment and hence bring this metamorphosis1. Great rebalancing refers to the growing prominence of the Asian economies, mainly India and China. Pricing the planet refers to the fact that environment sustainability is increasingly assuming importance in business strategy & policy planning around the world. Without doubt these factors will have a profound effect on the global transport sector also.
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In United States, National Highway Traffic Safety Administration (NHTSA) is also going ahead with its own tyre labeling program. It is holding stakeholder consultations and seeking information towards establishing a fuel efficiency standard for tyres5. Additionally US Environmental Protection Agency (EPA) has already introduced the US EPA Smart Way. Smart Way is a certification given by EPA based on the manufacturers products environmental performance in transport sector including tyres. EPA is also providing visibility to car and tyre manufacturers on their website based on their Smart Way certification. Tyre manufactures have already started getting themselves smart way certified. These developments indicate that environmental performance is poised to emerge as an indicator that would shape the future of the industry and therefore requires action from the industry. Beyond the environmental performance, most of these developments would also usher into market advanced technology. It would necessitate technology improvements within tyre industry and therefore shape the competitive landscape of tyre industry.
2.
Indian tyre industry & exports
Indian tyre industry exports stood at $ 834 million in 2008 showing a growth CAGR of 15.1% during 2005 to 20086. Indian tyre manufacturers remain bullish about the export prospects of the industry. Indian manufacturers plan to increase their European footprint through both organic and inorganic growth strategies. Other important markets for Indian tyres are Middle-East, Africa and US. While African share of Indian exports averaged at 17% of the market, US averaged at only 5% during 2005 to 2008. However the growth of Indian exports in European market has been
5
http://www.tirebusiness.com/subscriber/headlines2.phtml?cat=1204552929&headline=NHTSA+explains+information+ requests+for+tire+fuel-efficiency+rule&id=1285700669 6 EVI analysis based on data from international trade center
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very quick as compared to US and African markets. European markets remain high on the radar of Indian tyre manufacturers7.
Tyre Exports
Exports 678,264 834,973
602,913
513,618
2005
2006
2007
2008
The developments in European market will therefore have an important bearing on the Indian tyre manufacturers. There are developments on this front beyond European and American markets also. Possible adoption of standards similar to EU standards by UN GTR (Global Technical Regime) is also likely. UN GTR for wheeled vehicles, equipments and parts is a global forum that aims to standardize global technical standards to facilitate trade. This development would further increase the necessity of adapting to the EU technical standards. EU standards compliance needs a manufacturer to convey full information about some aspects of his product to the consumer. This doesnt necessitate that a manufacturer upgrades his manufacturing technology also, although it would be advisable in the wake of the labeling development. The presence of such information in market would lead to increased competitiveness in the market place based on this information which may lead to technology upgradation needs also. One of the possible effects of this regulation would be that the low cost manufacturers or non compliant manufacturers would now focus more on the markets that do not have such regulations. This could shift some exporters from Europe to African or middle-eastern regions. This could possibly create some market space for the compliant tyre manufacturers within European or US markets.
7
http://www.tirereview.com/article/80024/apollo_readies_for_massive_growth_in_europe.aspx
Emergent Ventures India (EVI) & Indian Tyre Technical Advisory Committee (ITTAC)
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3.
European emission reduction goals & tyre labeling regulation
Europe considers Sustainable Mobility as a major challenge facing the European Community in the light of climate change and it intends to reduce the total European energy consumption by 20 % by 2020 by means of a list of targeted actions including the labelling of tyres8. The European Parliament in March 2010 passed the tyre labeling regulation in that direction. The aim of this Regulation is to increase the safety and the economic and environmental efficiency of road transport by promoting fuel-efficient and safe tyres with low noise levels.9 The regulation would be administered by Director General Transport & Energy, European Commission. The regulation plans to introduce mandatory tyre labels on all tyres to be sold in Europe that will enable consumers to choose the best tyres in terms of fuel efficiency, wet grip and noise. The label shall be applied to car (C1) and light commercial vehicle (C2) tyres by means of a sticker and shall be included on technical promotional documents and websites for heavy duty vehicles (C3) tyres.7 The label will carry information about the fuel efficiency, noise pollution and wet grip of the tyre as shown in the image on the left.
3.1.
The label would require that the manufacturer quantify and display the noise pollution that a vehicle makes as it moves. The label would show the noise intensity generated in decibels (dB) as well as with the number of blue stripes representing sound. Three stripes would indicate more sound as compared to a single stripe.
3.2.
Tyre wet grip is the tyre's ability to keep in contact with the road in the presence of a water layer on the road; this is a key property to ensure driving safety. In order to ensure safety performance of tyres under wet road conditions a minimum wet grip
8 9
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:342:0046:01:EN:HTML http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:342:0046:01:EN:HTML
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index should be guaranteed. Tires with excellent grip in the wet have shorter braking distances on wet roads, which is an important safety benefit when driving in rainy weather. The label will display the wet grip performance of a tyre with a grade between A to G. Grade A will display the best performance while grade G the least.
3.3.
Rolling Resistance
Rolling resistance is a measure of the force that it takes to move your tires forward on the road. As you travel along, the weight of your vehicle deforms your tire tread where the rubber meets the road. The resulting deformity generates heat between the tire and the road, which is then wasted in the form of heat as the tire rotates.10 The regulation requires the labels to display the rolling resistance performance with a grade ranging from A to G. With the A being the best grade or tyre with very low rolling resistance while vice versa for grade G. Lower rolling resistance leads to lower fuel consumption. A nearly 40% difference in rolling resistance transforms into an approximately 6% difference in fuel consumption11.
4.
Compliance: EU tyre labeling
The following section details what options a tyre manufacture in India can exercise. It also explains some key questions concerning the legislation
4.1.
The regulation will apply to C1 (Cars), C2 (Light Commercial vehicle) & C3 (Heavy Commercial vehicle) type of tyres. The regulation will not be applicable on the following types of tyres: 1. Retreaded tyres
10
http://www.metronews.ca/vancouver/life/article/654282--low-rolling-resistance-tires-boostfuel-mileage 11 http://www.nokiantires.com/rolling-resistance
Emergent Ventures India (EVI) & Indian Tyre Technical Advisory Committee (ITTAC)
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Off-Road professional tyres Tyres designed to be fitted to vehicles registered before October 1, 1990 T-type temporary use-spare tyres tyres whose speed rating is less than 80 km/h; tyres whose nominal rim diameter does not exceed 254 mm or is 635 mm or more; 7. tyres fitted with additional devices to improve traction properties, such as studded tyres; 8. Tyres designed only to be fitted on vehicles intended exclusively for racing.
4.2.
Compliance timelines
Testing & labelling capacity building
2010
Labeling Regulations passed in European parliament
2011
2012
Last date for compliance
2012
2016
Review of scheme
4.3.
Certification procedure
The certification will be a self certification process; therefore manufacturer is free to choose his options for certification procedure.
4.4.
Tyre suppliers need to provide technical documentation of compliance as and when required. This means that the tyre manufacturers would be required to supply technical documentation of compliance along with their products. However veracity of the claims would be verified by market surveillance. The test procedure will be: (i) A single tyre is tested first. If the measured value meets the declared class or external rolling noise measured value, the test is passed;
And (ii) If the measured value does not meet the declared class or external rolling noise measured value, three more tyres are tested. The average
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measurement value stemming from the four tyres tested are used to assess conformity with the declared information;
4.5.
Testing procedures
Quantification of the three parameters: Noise, Rolling resistance & Wet grip would require the manufacturers to use a set of approved methods. Test methods for each parameter have been suggested.
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4.6.
Compliance would require that tyre manufacturers (i) Quantify the required parameters for labeling (ii) Technical improvements in tyre to qualify the minimum criteria. The manufacturer need to benchmark their products in order to plan for future business operations as the minimum criteria are expected to get stringent with time in European region. Moreover the indirect effect of the regulation would be the increased competition in the market place based on information on performance parameters. This would also require the manufacturers to continuously upgrade their technical capabilities. Overall cost for outsourced testing Cost for certification Estimated to be 2000-2500 per tyre Estimated to be 350- 400
4.7.
Additionally the tyre manufacturers would be required to make available the information also through their websites and publicity materials. The information should include the amount of fuel, CO2 emissions and costs that are saved. Therefore a fuel saving calculator must be made available. The calculator must also show CO2 emissions and cost saved. This would require the manufacturers to assess the fuel savings of their tyres. Although not mandatory, this kind of communication must ideally go beyond the technical specification and must be easy for the consumer to understand. Along with the green house gas impact reduction should also be carried out for the tyres.
4.8.
Emergent Ventures India (EVI) & Indian Tyre Technical Advisory Committee (ITTAC)
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ompliance
ommunication
apacity
4.8.1.
Compliance >
Tyre manufacturers must comply with the labeling requirements. This would require them to either develop the testing facilities inhouse or get their tyres tested externally. The least cost solution for Indian manufacturers would be to get together and outsource their testing requirements in a collective manner. Pooling together of testing would get them a better pricing from the testing agencies. This could be easily taken at the level of ITTAC. This would keep their cost down as well as prove more convenient and time effective for them.
4.8.2.
Communication >
The regulations also require the manufacturers to communicate the information to the consumer in a very understandable manner. Right communication in this case would be very important as more and more buyers would use the information in their buying decision. Any incomplete or ineffective communication could result in loss of sales. Secondly Green Branding has emerged as a very important concept both in India and Europe. Green branding is an even more important issue to be addressed in Europe. Therefore an effective communication also means that a company prepares itself to market the green aspects of their products also effectively.
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4.8.3.
Capacity >
By capacity we refer to the technology capability to manufacture higher performance tyres. This would be a very important parameter on which the manufacturers would have to assess where they stand, where the market will stand in a few years from now and how they need to prepare themselves to address the market as it emerges. Information on the market development and dynamics would be a very important input to their planning and capability enhancement. Therefore the capacity enhancement planning will be dependent on the external condition. Policy initiatives like the EU labeling regulation based on environmental and energy will be a very important force that will shape the future markets and hence are important to assess the future state of global tyre markets.
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5.
Case in point: How are automobile & tyre manufacturers acting on the issue
Both automobile & tyre manufacturers have been active on the issue and are looking to gain competitive advantage by also building a right communication and action plan around the labeling standards. Since the regulation is designed by EU authorities to save both fuel and avoid CO2 emissions, some companies are also integrating this within their overall corporate sustainability action.
#Case 1: Yokohoma Tyre receives AA-C labeling Under the new BluEarth concept Easy on the Environment, People and Society
Yokohoma tires has got its AE-01 passenger radial tested for EU tyre labeling standards. It has received AA-C rating for the tyre. The tyre will be marketed under the campaign Blu Earth by the company. The campaign Blu Earth is a marketing campaign based on the environmental theme. Its tag line for the campaign is Easy on the Environment, People and Society Yokohama endeavors to be environmentally friendly through excellent fuel-efficiency, and easy on drivers and surrounding living environments through improvements in safety and comfort, and reduction of noise outside the vehicle, As per the company12
12
http://www.tirereview.com/Article/80597/yokohama_bluearth_receives_design_honor.aspx
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Weve all become more aware of the CO2 emissions our driving creates, and tyre manufacturers are no exception. The latest tyre technologies have been specifically developed to reduce those emissions and these green tyres are available from your Ford Dealer.
Under the tyres segment on its website Ford is asking customers to choose greener tyres or tyres with lower rolling resistance as it saves CO2 emissions & fuel too. The section also draws the consumer attention to how he can lower CO2 emissions through other means by taking part in Target Neutral campaign jointly hosted by BP and Ford to reduce emissions from vehicles.
Lowering Driving emissions program being jointly done by Ford & BP. The feature figures as a part of the Fords overall communication on Green Tyres
The Target Neutral program to lower emissions from motor driving being jointly promoted by BP & Ford is a part of the Fords overall communication on Green Tyres
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