Continental AG’s tire business – arguably the company’s most important division – aims to intensify its competition with the top three global players over the coming decade or so.
According to an article published Nov. 28 by German financial daily Handelsblatt, growth in international markets as part of its "expansion strategy 2025" will fortify the European market leader’s position in other regions.
“We must state clearly that we currently lie a fair way behind the three largest global manufacturers, Bridgestone, Michelin and Goodyear,” commented Nikolai Setzer, head of Continental’s Tyres Division. “But if we can gain marketshare, then we’ll draw nearer to the top three.”
While the Handelsblatt shares that Setzer doesn’t view “being the best on all fronts” as necessary, it notes that the world’s fourth largest tiremaker is striving to gain a top technological position in core segments such as passenger car tires. Profitable growth is a priority, Setzer added.
In the first nine months of 2012, Conti increased its tire business turnover by almost 14% to 7.2 billion euros – 30% of the firm’s 24.6 billion euro turnover. Despite the slump in Europe’s automotive segment, Continental anticipates its turnover within our region will increase more than 7% to over 32.5 billion euros. The tire business is the main driver behind this.
Long timeframes are the rule within the tire business, observes the Handelsblatt. Five years can pass from initial planning to when a new factory enters service and can supply OE customers. “Therefore no flights of fancy lurk behind strategy 2025,” Setzer stated. “It involves concrete plans.”
The first phase of the three-stage plan covered the years 2001 to 2010; during this time Continental geared the tire business towards profitability, a move that involved decreasing capacity in the loss-making U.S. business and in the commercial vehicle segment. “Now we are in the middle of the second phase, to 2015, and we want to grow globally, particularly in emerging countries,” continued Setzer.
Handelsblatt writes that Continental is expanding production in China to eight million tires per annum, in India it is introducing radial patterns, it plans to begin its own production in Russia next year, and in Brazil it will double capacity to nine million units. In the plan’s third phase, to 2025, further increasing added value will play a central role.
One particular aim is to bring a greater global balance to production. “Continental has previously been to too great an extent at the mercy of fluctuations in Europe,” Setzer stated. “Therefore, we are positioning the tire division more consistently so it can profit from the dynamics of other global regions.”
To this point, the Handelsblatt notes that Continental is currently under-represented in the South American continent; this may well change through its sponsorship of the 2014 football World Cup in Brazil. (Tyres & Accessories)
