Michelin says GM Europe contract will not be renewed

May 30, 2002 PARIS Reuters reported that French tire maker Michelin said on Tuesday its original equipment contract with General Motors Europe would not be renewed after July 2002 because of differences in strategy.

Michelin said in a statement that its own strategy was no longer compatible with the acquisitions policy of General Motors.

"We remain confident that our companies will agree, at some future time, on the conditions for new cooperation," said Herve Coyco, global head of the cars and light trucks division of Michelin.

Michelin said the decision would have no impact on its 2002 profits and that production capacity would gradually be redistributed to other markets.

"The financial impact is negligible," a Michelin spokeswoman said. "We anticipated this in our 2002 outlook."

Michelin stock, which has risen in line with a robust European cars sector this year, was little changed at 42.12 euros at 0730 GMT.

The spokeswoman said that GM represented less than five percent of the company's total sales and that original equipment made up some 30 percent of total sales, with replacement tires making up the rest.

She declined to say how much the GM Europe contract had contributed to annual sales, adding that the company still had multi-year contracts with GM in North America which lasted until 2006 and that it was too early to speculate on the future of those contracts.

Michelin's contract with GM Europe expires July 31.