New Delhi – Continental has finally decided to take plunge in the burgeoning India’s premium passenger car & sports utility vehicle tyre market. Interestingly, the global tyre major has planned foray at a time when vehicle sales are dropping and most of the OEMs are shutting their operations partially. “We believe that this market cannot be run from Germany. If we have to develop our brand in this market then we have to be here,” said Dr Andreas Esser, Executive Vice President, Business Unit Replacement Tyres (Asia), Continental AG in New Delhi. Apart from entering the Indian market, Continental is working on larger strategy of increasing their marketshare in Asia, which also comprises two important markets of Indian & China. Continental’s majority of the 37 per cent sales come from Europe, Germany follows with 31 per cent, NAFTA has 17 per cent share. “We have merely 8 per cent share in the Asia market and we have to focus on India & China to raise our market share in this part of the world,” Esser added.
Continental has fair idea that carving a niche in the Indian market may not be easy as Indian market is flooded with strong local brands. It is also a major reason of building a brand first before taking decision on setting up production base. “The annual volumes in a particular market should be around 2 million tyres before any company decided to set up a manufacturing operation. The target sales of Indian market are to the realistic levels at the time of initial entry. We have to look for ideas other then setting up a plant at this stage,” Esser clarified.
Initially, Continental focuses on streamlining distribution and strengthening dealer network. We plan to tie-up with individual outlets and multi-brand tyre shoppes’ to promote the brand,” said Mr Prashant Kumar, Sales & Marketing Director of Continental’s India operation. Continental targets 20 cities in India and plans to set up 200 dealers by the end of next fiscal. India’s passenger car market production has grown from 0.72 million in 2002-03 to 1.76 million in 2007-08 recording almost 20 per cent growth. While tyre requirements in OEM and replacement market have grown close to 17 million in the current fiscal.
Continental has two plants in Malaysia and India and China market are being served from Malaysian and European plants. Interestingly, China has not emerged as a big market as yet for Continental as it sold around 500,000 tyres last year and sales targets are between 500,000 to 1 million in the ongoing fiscal. “Considering China, sales target in India is much low,” Esser confided. Continental indicates of pegging Indian market at around 250,000 tyres annually initially.
Continental prefers to enter the hi-end car tyre market in India and is holding talks with major Indian OEMs like Tata Motors and M&M to use Continental tyres as original fitment on their export models. Tata Motors has agreed to use Continental as original fitment on one of its utility vehicle model targeting the US market,” Esser disclosed without elaborating futher. “We are also in touch with M&M and few other OEMs for similar arrangement, hope to be concretized in 2009,” he said.
Meanwhile, Continental has hired 20 people for running their Indian tire operation. ‘We plan to double the strength in the next couple of years with increase in volumes,’ said Prashant Kumar. Continental has bicycle & motorcycle tire foray with Metro Tyres.