LONDON — Is Continental A.G. on the verge of demoting Goodyear to No. 4 in the world in terms of passenger tire capacity?
That's the contention of Astutus Research, a London-based market research firm, which said the scale of Conti's capacity expansions in the past few years — totaling close to 20 million units a year — has pulled the German company equal with Goodyear in the passenger/light truck tire realm.
Goodyear as a whole remains larger than Continental — by nearly $3 billion based on 2017 results — based on its stronger positions in truck, OTR and aircraft tires. Conti only recently revived its farm/OTR business and has no sales in the aircraft arena.
However, Astutus Research contends that Conti has pulled even with Goodyear in the $90 billion consumer tire sector that is considered the key battleground for the largest players in the global tire market.
- This story appears in the Aug. 27 print edition (Global Tire Report) of Tire Business
Both Continental and Goodyear declined to comment on the report, Astustus reported.
Depending on the number of days Goodyear's various car tire plants are in operation, Goodyear's annual capacity for passenger/light truck tires stands at approximately 140 million to 150 million units, according to research conducted by Tire Business.
Conti's worldwide capacity for the same type of tires is estimated to be 154 million units.
Conti's investments in new passenger tire capacity the past few years include:
- 2016 — $50 million for a High Performance Technology Center located at the firm's Korbach, Germany, tire plant dedicated to producing tires in the 19- to 24-inch rim diameter range with an annual capacity of 350,000 UHP tires at full capacity.
- 2015 — $500 million expansion of its nearly 2-year-old Sumter, S.C., plant that will double annual capacity to 8 million passenger and light truck tires by 2021.
- 2013 — Continental A.G. christened production Oct. 30 at its car and light truck tire factory in Kaluga, Russia, a $320 million project with an annual capacity of 4 million tires.
In addition, Conti has investment projects under way at a number of plants that could raise capacity by 10 million units short-term and 30 million long-term, including:
Thailand — a $265 million tire plant in Rayong due on stream in 2019 with a projected capacity of 4 million passenger and light truck tires by 2020 and the potential to be expanded up to 25 million tires per year.
China — Conti is moving forward with the Phase 4 expansion of its 6-year-old passenger tire plant in Hefei, a $294 million project that will boost the factory's capacity to 20 million car tires a year by 2022 from 14 million.
At the same time, Goodyear has opened one new plant, in San Luis Potosi, Mexico, while closing one in Philippsburg, Germany, and divesting another, in Tonawanda, N.Y., to Sumitomo Rubber Industries Ltd.
The net result is a decline in capacity of roughly 6 million units annually.
Goodyear's investment strategy of the past few years has been more focused on converting 14- and 15-inch capacity to higher value-added 17-inch and larger rim diameter models.
Goodyear also is building a plant in Colmar-Berg, Luxembourg, that is due onstream in 2019. The plant will use Goodyear's "Mercury" small-batch process technology and thus will start with a relatively small annual capacity of 500,000 high value-added units.
Astutus Research takes this strategy shift into account in its analysis, saying the "key challenge now for Goodyear is to return to sustained volume growth whilst continuing to streamline its portfolio."
In its summary, Astutus Research stated: "In an increasingly competitive tire market, Continental's continued expansion will add to the pressure on mid-tier players that are less efficient and do not hold a competitive advantage through either branding or distribution."
Astutus Research was established in 2012, covering the tire industry in general and the tire aftermarket more specifically. The group's goal, however, is to expand its coverage to the broader global automotive aftermarket.