After acquiring Modi Tyres in mid 2011, global tyre major Germany-based Continental has embarked on a major push to garner sizeable share of the Indian tyre replacement market, says Nikolai Setzer, member of Continental’s executive board, in an interview with R Ravichandran.
Can you explain in detail about the Indian operations now, post the acquisition of Modi Tyres in 2011?
Since 2008, we are importing passenger and light truck (PLT) tyres from our Europe and South America plants for distribution in India. Post the acquisition of Modi Tyres in mid 2011, Continental has invested heavily in setting up a new production building, alongside with machinery, for making radial tyres in India. With the new line for passenger radials, the company has just set the base for its original equipment (OE) business in India. Manufacturing facility for PLT at its existing tyre plant at Modipuram has an initial capacity of 800,000 tyres per annum which would be expanded soon to 1 million tyres per annum with an estimated investment of 50 million euros. Earlier this year, the company also launched its truck radials from the same facility whose truck radial capacity is 220,000 units per annum.
Given your presence in the replacement market for sometime now, are you looking at tapping OEMs in India?
Continental has a major presence among most of the global OE manufacturers. We are a preferred supplier of tyres to almost all high-end and luxury vehicle manufacturers in Europe, Americas and the APAC region. As many of our OE customers are already present in India, we are positively exploring the scope and extent of developing business with them for their vehicles meant for domestic and export sales.
There have been talks that Continental has proposed to commit an additional investment of 50 million euros?
We are increasing capacities and also investing in radial technology in parallel. We had already made an 50-million-euro investment since the Modi Tyres acquisition and just launched an additional 50-million-euro investment programme for the next two years.
What is the growth projection — both in short and long term and where do you want to be in next five years?
Currently, Indian PLT tyre replacement market is estimated at around 14 million tyres and is expected to grow to more than 30 million tyres by 2025 while the premium tyre segment represents about 28% of the total Indian replacement market volume, where Continental holds the fort. The Indian replacement market, despite the economic slowdown in recent years, continues to have a sizeable growth potential of around 7.5% annually over next 4-5 years. With our manufacturing presence, superior technology, coupled with new sales target, we see Continental grow much faster than the industry with a slew of new products, both in PLT and truck, bus radial tyres areas. Moreover, we have a dealer network of more than 425 outlets in almost all major cities and towns. Our channel partners are well equipped to cater to the needs of the targeted customer segment. Further expansion of the same is an ongoing process.