MOSCOW (Sept. 11, 2002) — Continental A.G. is setting up a tire-making joint venture with Moscow Tyre Plant and will invest $29.5 million over three years to build a factory adjacent to Moscow Tyre's existing factory.
The new, as yet unnamed joint venture will start production in the third quarter of 2003, with an annual capacity of 1.5 million Continental and Barum brand car and light truck tires. Capacity will more than double to 3.4 million units by 2006, the companies said, with most of the output destined for the local market.
The agreement, signed Sept. 10, formalizes a planned venture the two parties had discussed in April 2001. The newly disclosed agreement, though, is not as ambitious as originally planned—a $43 million investment for eventual capacity of 5 million units.
Moscow Tyre will provide the site for the tire facility at its plant in Moscow's central Taganskaja district. Continental, which will be majority owner, will provide the know-how.
Russian demand for replacement tires for western medium-class and premium cars is strong—“despite high customs duties and taxes, which increase the price of imported tyres by over 70 percent,” Conti said in a prepared statement.
Continental claims it already is a leading supplier to the upper segment of the Russian tire market. Its Barum subsidiary in Czech Republic supplies Russian car maker Lada with about 300,000 original equipment tires, and some of these will be provided from the new joint venture in the future.