Tyres & Accessories – Continental AG’s Commercial Vehicle Tires division has confirmed reports that it has revived its collaboration with Modi Tyres Co. Private Ltd. (New Delhi). 
According to the company, Modi will initially produce around 1 million Continental-branded cross-ply truck tyres for the Indian market. As a result of the move, the company has secured access to the 12 million commercial vehicle tyre-strong Indian market, which has been projected to grow at around 7%. Production already began at the start of June 2009.
The collaboration includes a technical cooperation agreement and a license agreement for Continental brand bias tyres. The Continental bias tyres will be distributed via a revived Modi sales network. “For us, this new agreement represents an extremely useful revival of our activities in India, a market, which we know will grow significantly over the coming years,” Continental project manager Christian Sass explained. Bias products still account for over 90% of the Indian market.
Earlier reports had suggested the partnership is “only technical in nature and does not involve any investment from the German tyre company.” However, an official statement said, “Further collaboration possibilities are currently being looked into.” India’s Wheels Unplugged reported that Modi Rubber Ltd. (MRL), is “looking to divest an undisclosed equity stake to German technology partner Continental AG, to fund expansion and as a strategic commitment,” quoting a top company executive. Continental AG representatives have not confirmed or denied this.
According to these new reports, Modi Tyres is aiming to roll out 1.1 million truck tyres and tubes annually and expects to expand its network of dealers from 500 to 2,000. In addition, Continental already has a technical agreement with JK Tyres and the reports speculate that this deal may now end.
Running at 40% of its 95,000 tyres-a-year capacity, Modi Tyres reportedly re-started exports in small volumes to Bangladesh, Sri Lanka and Afghanistan earlier this year in an effort to emerge from an apparent form of bankruptcy protection. It has also initiated marketing efforts reaching out to tyre dealers and truck fleet associations through calls and SMS text messages. Modi is aiming to reach full capacity by March 2010.
Furthremore OE supply talks have reportedly also been initiated with Tata Motors and Ashok Leyland. The commercial vehicle makers have asked for certification, for which tyres have been sent to the Indian Central Institute of Road Transport (CIRT).
The collaboration between Continental and Modi dates back to 1974 when an extensive technical cooperation was agreed on for the set-up of a new Modi tyre plant in Modipuram, Meerut in the state of Uttar Pradesh. From planning to execution and from technology transfer to active support, Continental has supplied expertise to Modi for many years. The tyres were marketed under the name Modi-Continental and quickly gained the position of a benchmark on the Indian market. The brand awareness of Continental increased from year to year. However, Modi temporarily stopped production of bias tyres in 2001 and only started to reactivate the tyre plant two years ago. New contacts were formed between Continental and Modi and the previous arrangements were revived in the subsequent agreements.
