About Continental and Sime Darby Tyre Group

The link between the Sime Darby Tyre Group (SDTG) and Continental AG of Germany started in January 2002 when a Technical Assistance Agreement was signed between the two companies. Under this agreement, Continental will grant DMIB Bhd and Sime Tyres International (M) Sdn Bhd (STI) – both units of the Sime Darby Group – a licence to manufacture tyres and related tyre products and distribute them in Malaysia.

According to a source in SDTG, this new agreement replaces an earlier one (signed in 1985) which they had with Sumitomo Rubber Industries of Japan. This new strategic alliance with Continental, the fourth largest tyremaker in the world, will arm DMIB/STI with the technological capabilities to remain competitive in the open market of the AFTA era and beyond that, WTO.

The signing of the agreement also set in motion the move for Continental, which was founded in 1871, to have an equity interest in Merit Manufacturing Sdn Bhd which, pursuant to the reorganisation scheme for DMIB and STI, will become the holding company for the entire equity interest of both companies.

The reorganisation of the two tyre companies is part of Sime Darby’s effort to consolidate its resources and become leaner, more efficient and lower costs. This is crucial to its future in the light of the tyre market losing all protection against imported products. By January 1 2003, tyres imported from other ASEAN countries will be taxed at no more than 5% under the commonised preferential tariff rate for AFTA. As some global players already have factories in other ASEAN countries, this will pose a greater challenge for DMIB and STI.

Uniting the two companies, sharing resources and also having the strategic alliance with Continental will enable the SDTG to compete and maintain a leading position in the domestic market.

“We can offer Malaysian customers a very broad range of products from our flagship Continental high-performance tyres to those of our other brands which have something to suit every motorist’s budget,” Choong Kee Seng, the Sales Director of the Sime Darby Tyre Group, told AUTOWORLD.COM.MY. He added that the company also has the largest tyre dealer network in Malaysia – totalling over 1,000 outlets – and will continue to expand this network as well as enhance products and services.