HANNOVER, Germany (Nov. 3, 2012) — Continental A.G. has ambitious plans for its tire division in the coming dozen or so years, starting with up to seven new tire plants — including three in the Americas — and the possibility of broadening the business's reach into market segments where it does not compete today.
Conti's mid-term vision through 2025 was set out earlier this week by Nikolai Setzer, head of Conti's tire business, ahead of the firm's ContiTech Forum event in Hannover.
The strategy covers becoming more global, entering new product segments and expanding capacities, including the addition of the seven factories.
The plan comprises three phases, Mr. Setzer said. The first phase ran from 2001-2010, while the current phase, running through 2015, focuses on accelerating growth in the BRIC (Brazil, Russia, India and China) countries and building a strong technological position.
The third phase, from 2016-2025, will position Conti with a more balanced global footprint and make it one of the top three tire makers in terms of technology worldwide.
Mr. Setzer said achieving a top-three ranking in terms of global sales was less important than selecting geographical and market segments that will drive profitable growth.
Conti has 17 tire factories in 15 countries, with a heavy bias to Europe and the U.S. Within the past year Conti has embarked on greenfield projects in the U.S., Russia and China as well as upgrades of existing plants.
The next stage of expansion will involves three factories in Asia; three in the Americas and probably one in the Eastern part of Europe, in addition to the new plants announced in the current phase.
He did not comment on the projected investment for these projects. By comparison, Conti committed $1.3 billion for the U.S., Russian and Chinese plants.
In addition, Mr. Setzer said the company plans to enter new segments to drive profitable growth. He specifically mentioned off-road mining — a segment it sold to Titan International Inc. six years ago — and speciality tires as potential opportunities in the commercial segment and two-wheelers in the consumer segment.
A major plank of the strategy will be to build the truck tire activity to become more representative globally and to become a major player in the fleet activity, offering a full range of products and services to the global truck markets.
Mr. Setzer noted that the company generates only around 4 percent of truck tire sales from activities in the Asia-Pacific region. By 2025, this is expected to rise to around one-third, leading to a 33-33-33 split among the three main regions of the world.
Similarly in consumer tires, Mr. Setzer projected sales in Asian region to rise to about 20 percent from 5 percent.
This article appeared on the Website of European Rubber Journal, a London-based companion publication of Tire Business.