Tyre business is growing in India and it shows. In a recent visit to India, Dr. Elmar Degenhart, Executive Board Chairman, Continental AG, one of the leading international automotive suppliers and the world’s fourth largest tyre manufacturer, stated that BRIC is at the centre of focus for the company‘s growth strategy.
According to Dr. Elmar Degenhart, the company is continuing to concentrate on the key components of its business strategy, one of the main ones being above-average profitable growth in the growth regions, including BRIC, especially in China and other Asian countries. Continental wants above-average profitable growth in Asia – this remains its objective. Last year, the company increased its sales in Asia so that it now makes up 14% of sales. It has even reached 18% in its Automotive business – and the quantities supplied for vehicles manufactured in Germany that are destined for Asia are not included in this number. But this is only an interim goal. In the long-term, Continental wants its products to have a share of the equipment market, and therefore sales in Asia, that is similar to the share they have known for many years in their current core markets of Europe and North America, said Dr Degenhart.
Continental had made significant investments in India in the last quarter by acquiring Modi Tyres and further committing to an investment of 50 million Euros to ramp up the tyre business in the country. The company had announced that it will increase the production of the Modipuram plant beyond half a million bias truck and bus tyres (TBX) already this year. From there, TBX production is planned to continuously grow to more than one million units in 2013. Continental also expanded the India Technical Centre in May 2011, and plans expansion of its automotive facilities in Pune and Manesar by early 2012.
Continental’s ContiTech division is similarly looking at an aggressive growth in the country. Phoenix Conveyor Belt India (P) Ltd (formerly Phoenix Yule), based in Kolkata is looking at a considerable increase of its turnover in the next few years. They are looking at sizeable investments in the country, like capacity expansion, backward integration, setting up a technology centre for emerging markets, etc. Currently, PCBI has a 57,000 sq. meter 20,000 MT capacity plant in Kalyani, West Bengal.
Dr Degenhart also added that India has been witnessing growth for some time now, and it is a huge market with lots of opportunities. According to him, with a well-educated engineering base, deep technical understanding and language skills, Continental believes India will grow more stable than China. The political and economic stability in the country will also aid the rate of growth. Continental believes that India will see improvements and capacity addition in infrastructure, which will trigger continuous growth. The company hopes to double its growth in India, Dr. Elmar Degenhart added.
Continental is banking on its localization strategy and believes it is key to its growth and success in such markets. With a high degree of localization of the value-added chain, Continental is capable of offering high-end technology with global standards customized for the Indian market and more importantly at an affordable cost. Continental collaborates its technical expertise and global exposure with the know-how of its Indian engineers and specialists. The company is localizing the entire value chain in the country, starting from local business development, to local R&D, to local purchasing to local manufacturing. Hiring the right resources is also at the centre of this strategy, according to Dr. Degenhart.
With sales of €26 billion in 2010, Continental is among the leading automotive suppliers worldwide. As a supplier of brake systems, systems and components for powertrains and chassis, instrumentation, infotainment solutions, vehicle electronics, tires and technical elastomers, Continental contributes to enhanced driving safety and global climate protection. Continental is also an expert partner in networked automobile communication. Continental currently has close to 160,000 employees in 45 countries.