KORBACH, Germany—When you think of Continental A.G., you think of tires, right?
But that's not nearly the case anymore.
True, the world's fourth largest tire maker and parent of Charlotte, N.C.-based Continental Tire North America Inc. (CTNA) makes and markets the Continental and General tire brands as well as several other lines.
But with its $16.7 billion purchase in December of automotive electronic components maker Seimens VDO Automotive A.G., Continental A.G. became the fifth largest automotive supplier in the world, with 150,000 employees and annual sales that could reach $40 billion in 2008.
With that move and others, it is looking at tires and their relationship to the vehicle in an entirely new light.
It's all part of what company executives are describing as the “new Conti.”
While the tire divisions, which generated $8.8 billion in sales in 2007, no longer make up the bulk of the company's revenues, Conti officials from North America see tremendous potential for them coming from the company's expanded vision of tires and their relationship to the rest of the vehicle.
“That's why it's important for the dealer to know that our organization and product set-up now is making us completely different than any other tire company out there,” said Andreas Gerstenberger, executive vice president of sales and marketing, passenger and light truck replacement tire business unit for Conti in North America.
“Why? Because we don't develop our tires as a stand-alone product anymore,” he said at a recent press briefing at Conti's Korbach tire plant and in a subsequent interview during the Reifen (German for tire) trade show in Essen, Germany. “We develop our tires as part of an integrated system together with other chassis components, including software.”
Conti is the only tire company that has all of this automotive know-how under one roof, he claimed. “Nobody else has that.”
It's taken Conti 10 years and six major acquisitions to get to where it is today, Mr. Gerstenberger said.
The moves include:
c The $1.93 billion purchase in 1998 of the brake and chassis operations of ITT Industries Inc., the core of which was the Alfred Teves GmbH company;
c The acquisition in 2006 of Motorola Inc.'s automotive electronics business;
c The purchase in 2007 of a majority interest in the Slovak tire and rubber goods maker Continental Matador Rubber s.r.o., which vaulted Conti to the No. 1 position among tire companies in Europe; and
c The Seimens VDO acquisition.
During this period, Conti also acquired Temic, the international electronics specialist unit, from Daimler A.G., and Phoenix A.G., a specialist in rubber and plastics technology.
With these companies now under its corporate umbrella, Conti has restructured the company into six divisions, two of which are Passenger and Light Truck Tires and Commercial Vehicle Tires.
The others are: Chassis & Safety, which includes electronic and hydraulic brake systems and chassis components; Powertrain, which includes gasoline and diesel systems, electronics and sensors; Interior, which consists of interior modules, connectivity, instrumentation and displays; and ContiTech, which includes air spring systems, conveyor belts and vibration control and power transmission systems.
Together, these companies give the German conglomerate the internal capability of developing total chassis system solutions for auto makers, of which tires are an integral part.
They also position Conti to address four megatrends it has identified in the automotive industry, Mr. Gerstenberger said.
Three of them—safety, environment and affordable cars—directly involve tires, while the fourth, “information,” concerns information management in vehicles as well as intelligent mobility.
What does all this mean for Conti in the U.S.? Dealers, Mr. Gerstenberger said, already can see some of the results based on the new products the company has launched over the last few years.
“The product performance in all kinds of different categories, for the Continental brand and for General or any other brand today, is already on a completely different performance level,” he said.
The recently introduced General Grabber HTS light truck tire, for example, has 15-percent better rolling resistance than former company products in that segment, he said.
Conti tires also have shown “outstanding” results in braking (stopping distance) as a result of the company's knowledge of braking algorithms, Mr. Gerstenberger said.
The firm's R&D and technical abilities “make us, I would say, probably the most competent company when talking about safety,” said Conti North America CEO Matthias Schoenberg. “When we talk about wet braking, or hydroplaning or whatever, we can talk about more than just the tires.”
One way Conti will look at tire development is through what Burkhard Wies calls global chassis control. He's Conti's vice president of tire line development worldwide for business unit replacement Europe, NAFTA and Asia.
Conti technicians, he said, can examine how various vehicle safety systems—such as electronic air suspension, electronic stability control, force feedback pedal, power steering, active rear axle, chassis and safety controller and an intelligent tire system—can be used in tandem to prevent vehicle accidents and injuries and enhance not just tire performance but vehicle performance,
The company already is working on developing an intelligent tire system for possible introduction perhaps as early as 2010. The system features a sensor attached to the tire's inner liner to measure tire pressure and temperature as well as provide other data that, for example, could help reduce vehicle stopping distance.
The potential of such a system is even greater, Mr. Wies said. It could support, for example, the electronic braking systems, provide load-dependent pressure warning data, support electronic damping systems and detect the overloading of tires.
“It's not easy to explain all of this,” Mr. Gerstenberger said at the Reifen show, “because it's a pretty complex thing that we have right now as a corporation.
“But I think the combination of the former single-product focus in a system approach, hardware and software, is something that really differentiates us.”