Continental Automotive Group poised for growth in Asia
Most of us are familiar with Continental’s range of road tyres, products which the company has a 140-year history of producing. Along with the likes of Bridgestone, Michelin and Goodyear, Continental ranks among one of the most recognizable tyre brands worldwide, but that is in actual fact just the tip of a €26 billion iceberg.
That figure is Continental AG’s revenue for 2010, and €16 billion was raked in by its Automotive Group, which supplies automotive parts such as injectors, fuel pumps, on-board electronics and entertainment systems. These parts are usually supplied direct to OEMs and not available aftermarket, which is why this portion of the business gets very little prominence among the general public.
For 2011, the company is anticipating sales of at least €29.5 billion, with a pre-tax profit margin of 10% targeted, up from 9.7% earned in 2010. In the first half of 2011, the Automotive Group on its own raked in sales of approximately €9.1 billion, a 15% year-on-year increase from 2010.
A series of acquisitions and mergers over the years, the most important being Siemens VDO in 2007 in a deal worth €11.4 billion, has turned Continental into one of the world’s biggest automotive suppliers. Among its vast network of sites worldwide is a plant and technical centre in Penang which we visited a couple of years back.
Situated just off the North-South Highway in Seberang Perai, the plant started life in 1985 making instrument clusters for the Proton Saga. Today, it is a key supplier to Proton and Perodua, and also thriving on exports to car makers in the calibre of Mazda, Mercedes-Benz, Nissan, BMW, and the Volkswagen Group.
The Penang plant is part of a bigger puzzle in Continental’s long term aim to secure a bigger footprint in the growing markets of Asia. In 2010, Continental increased its sales in Asia by almost 50% to €4 billion, accounting for a 21% share of sales in the continent.
Speaking on Continental’s future prospects in Asia, Dr. Elmar Degenhart, Chief Executive Officer of Continental Corporation, said, “The recent plant openings in Heifei and Jinan in China, the ground breaking of a new R&D center in Singapore, our new office building to be opened in Icheon in Korea later this year and the extension of our existing Tech Center in Bangalore in India are only some examples of our high level of commitment to the Asian market.”
We were in Germany last week to visit Continental Automotive Group’s facilities in Babenhausen, Regensburg, and Frankfurt, where we had the chance to see and briefly experience the Group’s vast array of products, which are organized into three divisions – Interior, Powertrain, and Chassis & Safety.
First stop was at Babenhausen, which houses development for products of the Interior division. Here, we were given technical briefings on products that cover on-board infotainment systems, instrument clusters and human-machine interface. We then had the opportunity to experience these products ourselves in short drives around the company’s test track in Regensburg the very next day.
Our second day at Regensburg was hosted by the Powertrain division, responsible for items such as injectors, turbochargers, power electronics, sensors, ECU, and transmission control systems. We then experienced their handiwork in test cars such as the Volkswagen Polo, Volkswagen Golf, BMW M3 and BMW ActiveHybrid7. There was also a tour of a satellite facility in Regensburg specially dedicated to developing turbochargers.
Finally, we have the Chassis & Safety division based in Frankfurt. Here are the folks responsible for making things like traction control, stability control, and parking sensors. This facility also had its own test track, on which we had the chance to try innovations such as Emergency Steer Assist, Pedestrian Protection, air suspension, and Emergency Brake Assist.
The topics and contents of the visit are simply too vast to summarize and publish in one article, and as such, we won’t even try. Over the next few weeks, watch out for follow up articles as we delve deeper into the three divisions that make up the Continental Automotive Group.
