HANNOVER, Germany-Continental A.G. and Yokohama Rubber Co. Ltd., technology exchange partners since 1987, have agreed to cooperate more closely in tire marketing and manufacturing.
Pending completion of the deal later this year, Conti and Yokohama will set up a joint venture in Japan to promote sales of the companies' tires to Japanese vehicle makers, and Conti will make capacity available in North America for the production of Yokohama-branded car tires in 2002, according to a company spokesman.
Conti and Yokohama executives signed a letter of intent covering their agreement June 25.
Among the key provisions are stronger cooperation in tire production-particularly in the North American Free Trade Area-and on technological collaboration, Continental said.
For its part, Yokohama will support Conti's efforts to build market share in the Japanese replacement market, Conti said. It's possible that Yokohama could make Conti-brand tires in its Asian plants, the spokesman said, but that's not considered a high priority at this time.
In addition, the companies will evaluate opportunities for synergies, including joint purchasing of raw materials. The spokesman said it was premature to discuss the companies' projected savings from joint purchasing.
Conti Chairman Stephan Kessel said the deal will enhance both companies' competitive positions and expand the reach of their respective products to the global automotive industry.
The companies have no plans now for any cross-ownership, but the spokesman said that could be a possibility in the future.
Continental has no original equipment presence in Japan currently, the spokesman said, while the company's aftermarket presence there amounts to 200,000 units, or only about 0.5 percent of the market. Conti brand tires are imported and marketed in Japan now by the Yanase trading company.
By allowing Yokohama to get involved in aftermarket distribution of its tires, Conti hopes to build sales there to a million units or more in the coming years, the spokesman said.
Regarding OE contracts, Conti hopes establishing a presence in Japan will open up contracts for Japanese car companies' global platforms, the spokesman said, which could pave the way for supplying these companies' subsidiary assembly plants in Europe and North America. He cited increasing cooperation between DaimlerChrysler A.G. and Mitsubishi Motors Ltd. as an example of global platforms.
Details of the planned alliance will be finalized during the second half of the year.