An employee inspects tires at the Continental AG factory in Aachen, Germany. The tire giant invested more than 185 million euros in the Hefei plant in China, which will have an initial annual production capacity of 4 million units. [Photo / Agencies]
HEFEI - Continental AG, the world's fourth-largest tire maker by market share, opened its first tire manufacturing plant in Hefei city in Anhui province on Wednesday, to meet rising demand from the world's largest automobile market.
The German tire giant invested more than 185 million euros ($262 million) in the Hefei plant, which will have an initial annual production capacity of 4 million units.
"The opening of our manufacturing plant in Hefei is a key milestone on our journey to enhancing strategic growth and further increasing our presence in China and Asia," said Nikolai Setzer, a member of the company's executive board, who is also responsible for Continental's passenger car and light truck tires division. Tires produced from the plant are cater to high-performance premium and medium passenger cars, to meet growing demand from the Asia-Pacific and Chinese markets.
The first batch of tires from the new factory will include the ContiComfortContact 5, which has been specially developed to satisfy the requirement of Chinese consumers.
The facility will be further expanded with continuous investment in the future to achieve a long-term annual production target of 16 million tires. The company currently operates 1,400 authorized retail stores in China, including its latest in Changzhou, Jiangsu province.
The Hanover-based company's global sales reached 26 billion euros in 2010, and are expected to show a 10 percent year-on-year growth this year, driven by demand from booming Asian economies.
The robust growth of automobile sales in China over the past two years has provided solid ground for the company's expansion in the country.
China's automobile production rose 32.44 percent year-on-year to 18.26 million units with sales of 18.06 million units last year, according to statistics released by the China Association of Automobile Manufacturers in January.
The association also expects growth of beetween 10 and 15 percent in the country's auto market this year, despite fluctuations in the first few months.
Compared with its peers, Continental arrived late in the Chinese market as other international tire giants had already established plants in the country. However, being late has had its advantages.
"Coming late has become one of our advantages because we have had more time to identify the requirements of Chinese consumers," Setzer said.
Continental has no original equipment manufacturing (OEM) business in China, but senior company officials said that they will enter the market in the near future. The company is currently in talks with a few potential partners, but officials declined to elaborate on the details of the negotiations. "Usually, we will enter OEM business after the plant has been runing for two or three years," said Elmar Degenhart, chairman of Continental's executive board.
The company will open a factory in Jinan, Shandong province next week.
