Leading technology and component supplier Continental Automotive’s tyre division, Continental Tires has unveiled an ambitious strategy for future growth in the Indian market. Having established its presence in India in 2011, the company aims to substantially increase its volume sales, targeting a growth of approximately 50-60% over the next five years.
The company is bullish about India’s automotive market’s growth potential, which has been expanding steadily and emerged as the world’s third-largest passenger vehicle market in CY2022. In the first half of the current fiscal year, the domestic market saw the sale of over 1.80 million cars and SUVs, representing a year-on-year growth of 6%.
Capacity expansion is a crucial part of Continental’s growth strategy, and the company plans to incrementally expand its manufacturing capacity at the Modipuram plant in Uttar Pradesh by the end of CY2024. Despite having invested over INR 1,000 crore since its inception, Continental Tires continues to make these strategic investments to align its capacity with market demand.
In addition to capacity expansion, the company is expanding its retail footprint in India. With nearly 200 Continental-branded tyre shops already in operation, the company intends to grow its network by identifying untapped market areas and aligning its core values of safety and comfort with its retail partners.
Samir Gupta, CEO of Continental Tires (India), expressed optimism about the future, stating, “We envisage growing by 50-60% of our current volume levels over the next five years. India is the world’s fastest-growing economy, and improving infrastructure will drive road transportation for cargo and passenger vehicles. This will naturally lead to increased tyre consumption. We have a highly positive outlook for our future growth.”
While Continental Tires is a relatively new player in the Indian tyre market, with a market share still in single digits, the company focuses on providing innovative technologies to its customers. Gupta added, “We are strengthening our capacities and footprint as we intend to grow our market share.”
Continental Tires primarily operates in the aftermarket in India. However, it also considers venturing into direct original equipment manufacturer (OEM) supplies. However, the company currently places a stronger focus on the replacement market. Gupta explained, “We are waiting for the right time, and once we establish ourselves in the aftermarket, we will start focusing on the OEM space. It is certainly something that is on our agenda.”
The company has ample room to expand its existing plant in Uttar Pradesh over the next few years, eliminating the immediate need for greenfield expansion. Continental Tires has been a preferred tyre partner for Mercedes-Benz India dealerships for the last five years and is a pivotal supplier to Audi and Volkswagen India’s authorised service centres in the country.
In response to the evolving Indian market, Continental Tires introduced 19- and 20-inch passenger car radial (PCR) tyres last year. The Indian market is witnessing a trend towards larger tyres, with a growing demand for PCR tyres above 15 inches.
The company is experiencing a shift from bias-ply to radial tyres in the commercial vehicle segment. Continental Tires is the sole player to introduce its intelligent tyre (i-Tyre), equipped with sensors that monitor tyre temperature and pressure. This innovation helps fleet operators achieve up to a 3% improvement in fuel efficiency by appropriately maintaining the tyres of their heavy-duty vehicles.
Sustainability is a core focus for Continental Tires, particularly in the PCR segment. The company aims to reduce carbon emissions by 60% by 2030 and achieve carbon neutrality by 2060. It has already begun recycling PET bottles to extract polyester, a critical raw material for tyres. It invests in solar power to fulfil a third of its energy requirements. Gupta emphasised, “Sustainability is the most powerful trend at the moment. All PCR tyres produced in India meet the criteria of low rolling resistance and noise while offering high traction. Therefore, our range is suitable for electric vehicle applications.”
With an improved road infrastructure and rising average vehicle speeds in India, Continental Tires’ local R&D team is collaborating with Continental’s global design teams to develop new products tailored to the Indian market.
Despite some recent stabilisation in aftermarket tyre prices over the last two quarters, Continental Tires remains cautious about potential disruptions, such as current events in Israel. Gupta noted, “The last 2-3 years, starting with 2020 (Covid), were full of challenges, with logistical inefficiencies leading to increased logistics, energy, and raw material prices. Rising oil prices could impact the tyre industry.”
Nevertheless, Gupta reaffirmed the company’s commitment to the Indian market, expressing aspirations to become one of the top three players in the Indian market.
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