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August 18, 2014

CHINA: Continental targets local OEMs in planned China ramp-up

Continental AG has said it will continue to invest heavily in China as it looks to increase its presence in the world's largest new vehicle market.

Continental AG has said it will continue to invest heavily in China as it looks to increase its presence in the world’s largest new vehicle market.

CEO Elmar Degenhart, during a tour of his company’s plants in China, said at least USD 1.3bn will be invested in the country over the next five years, in line with the previous five years. In this period, the domestic vehicle market in China has almost doubled in size, from 13.6m in 2009 to close to 24m units expected in 2014.

Continental generated revenues of EUR3.3bn in mainland China in 2013, equivalent to almost 10% of global sales. Mr Degenhart said the aim is to double this ratio to 20%, or to around EUR10bn, by 2020. Revenues from its Chinese operations are expected to grow to EUR 4bn this year.

He said he believes that economic growth in China will remain stable in this period, allowing the automotive market to remain on course for long-term sustainable growth.

He confirmed said the funds will be invested in new factories, the expansion of existing facilities, in training new workers and to bolster its R&D capabilities in the country.

Annual production capacity at its Hefei tyre plant will be doubled to 8m units per year, while a new electronic systems plant will be built in Wuhu, Anhui province.

The company will increasingly focus on supplying domestic Chinese vehicle manufacturers, which have been losing market share in recent years to overseas brands. It intends to increase the supply of more advanced components and systems to these companies to help them improve their competitiveness.

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