Continental India launches locally-made passenger radials

Continental AG, the German supplier that has businesses ranging from powertrain to interior, chassis and tyres, has begun production of passenger car tyres at its Modipuram plant.

The company’s tyre division Continental India (which also includes a tyre tube unit at Partapur near Meerut) has separate production lines for passenger radials at its Modipuram facility that will see the rollout of two brands – Conti Max Contact MC5 and Conti Comfort Contact CC5.

While the CC5 tyres are for compact and mid-sized cars, the MC5 range is targeted at high-end mid-size and executive segment cars. The company is in talks with potential carmakers here, said executive board member, Nikolai Setzer, who unveiled the products at a Mumbai press meeting today.

Earlier this year, the company launched its truck radials from the same facility whose truck radial capacity is 220,000 units per annum. The passenger radial unit has a manufacturing capacity of 800,000 units per annum.

Continental’s tyre business began in India way back in 2008 when it brought in products fully imported from its German plant. In 2011, it began its India journey in right earnest when it acquired a 100 percent shareholding in Modi Rubber which had a one million unit capacity for cross-ply tyres for trucks and buses. At that time, Continental had invested to the tune of 50 million euros in its tyre business.

Prashant Kumar, director (marketing & sales) Continental India, said that while the company will focus on local OEs, it sees potential in the aftermarket that is slated to grow at 7 percent CAGR from 2015. To support the passenger car operations, it has established a dealer network of 425 outlets that will sell the tyres alongside 30 dedicated brand shops. The Modipuram facility has a staff strength of 1,500 that work on both truck and passenger radials.

Continental’s foray into passenger radials marks its entry into the heart of the business and with its huge capacity, the company hopes to play a key role going forward. It sent 100 employees to its facilities overseas for training in radial technology, top sources said.

With the new lines for passenger radials, the company has set the base for its OE business in India, says Setzer. The company’s immediate priority is to focus on its team for its operations as well as dealerships. Top sources reiterated that Continental is committed to offering quality products and is not looking at numbers currently and market share targets.

India’s tyre market is dominated by the likes of Ceat, MRF and Apollo Tyres, strong local players which have been joined by new players thanks to the entry of multinationals such as Michelin and Bridgestone. The Continental tyre brand is a relatively new brand in India and down the line, the company will look for ways to spread awareness of the range and quality. At present, a lot of brand awareness has been created through its international association with football, in particular the 2014 FIFA World Cup held in Brazil a few months ago.

Continental’s tyres business has close to 200,000 employees across all its divisions. In 2013, its share of tyre sales from Asia has been in the region of nine percent and top sources said the Asia part of the business will only increase in the years to come.

The tyre division has 24 production and development locations globally and all R&D is centralised in Germany. The tyre division’s sales in 2013 were worth euro 9.6 billion (Rs 73,584 crore).

Continental’s association with Modi Rubber goes back to the early 1970s when it has a technical collaboration with the Indian company. The tyres were then marketed under the brand Modi-Continental.

(L-R) Prashant Kumar, director (marketing & sales), Continental India; Nicolai Setzer, Board member, Tyres Division, Continental AG; Antonio L Seabra, EVP, PLT, APAC (corporate) and Dalibor Kalina, VP (Marketing & Sales, PLT RE APAC, Continental AG, at the passenger car radial launch in Mumbai today.