Continental and Sime Darby set up a tyre Joint Venture in Malaysia
Continental and Sime Darby set up a tyre Joint Venture in Malaysia, providing Continental with a secure foothold in the ASEAN market.
Hanover/Kuala Lumpur, February 26, 2003. Continental AG, Hanover, Germany, and Sime Darby Berhad, Kuala Lumpur, Malaysia, today signed an agreement giving Continental a stake in Sime Darby’s Malaysian tyre activities. The new company will be known as SDC Tyre Sdn. Bhd.
The signing ceremony was witnessed by Dato’ Seri Kerk Choo Ting, The Honourable Deputy Minister of International Trade and Industry, Malaysia and His Excellency, Mr Juergen A.R. Staks, the German Ambassador to Malaysia.
The agreement was signed jointly by Tan Sri Nik Mohamed Yaacob, Group Chief Executive of Sime Darby Berhad and Manfred Wennemer, Chairman of the Executive Board of Continental AG. Mr Wennemer stressed that Continental would
now be in a position to close the regional gap in its global production activities in Southeast Asia. “Together with our partner, we now have a solid production and sales basis which will make the ASEAN and Australian markets accessible to us and considerably increase our market share.” With annual sales of more than 29 million car tyres, this region has more than twice the market volume of China.
Nik Mohamed Yaacob in his speech noted that the strategic alliance augurs well for the Sime Darby Tyre Group which will benefit from Continental AG’s advanced tyre technology and further enhance Malaysia’s competitiveness in the Asean region and other markets. At the same time the Joint Venture will also benefit from the production and marketing of one of the world’s top brand name in tyres.
Continental AG will have access to Sime Darby’s extensive tyre dealer network in Malaysia which is the largest in the country.
He added that Continental AG’s participations in the joint venture is a positive indication of its confidence in Malaysia’s economic growth and political stability and in Sime Darby’s strength and market position.
Sime Darby is Malaysia’s leading multinational and one of Southeast Asia’s largest conglomerates with a comprehensive range of production and business activities. In 2002 sales of around 3.2 billion USD were realised. The Group’s tyre manufacturing business activity was hitherto carried out by two companies – DMIB Berhad and Sime Tyres International Sdn Bhd which will now combine into SDC Tyre Sdn. Berhad. Continental will initially invest around 31 million USD in the new company, thereby acquiring a 30-percent share.
The agreement provides the option for Continental to obtain a further 21 percent share in the new company in two years’ time.
The tyre factories which are located in Malaysia’s north (Alor Setar) and central Malaysia (Petaling Jaya, near the capital Kuala Lumpur) have a combined annual production of around four million passenger car tyres, one million light truck tyres and close to 300,000 truck tyres. This production volume has secured the two companies the position of No.1 supplier in Malaysia’s market for passenger car original equipment (DE) and replacement tyres, as well as replacement tyres for commercial vehicles.
Co-operation between Continental and Sime Darby will facilitate production of premium car and commercial vehicle tyres in Malaysia. The new company is bound to benefit from the opening up of markets due to a trade agreement for the Asian Free Trade Area (AFTA) which came into effect on 1st January 2003. This agreement inter alia, allows a reduction of hitherto prohibitive customs tariffs between AFTA states.
The Continental Corporation is a major supplier of brake systems, chassis components, vehicle electronics, tires and technical rubber products. Worldwide the company had around 65,000 employees on its payroll in 2001 and took in 11.2 billion in sales.
Sime Darby Berhad is a Malaysian multinational conglomerate with core business activities in Plantations, Tyre Manufacturing, Property, Heavy Equipment Distribution, Motor Vehicle Assembly and Distribution, Energy, General Trading and Services industries, and have extensive trading and manufacturing interests in the People’s Republic of China (including Hong Kong SAR and Macau SAR), Singapore and Australia. The Group also operates in Negara Brunei Darussalam, Indonesia, Thailand, Vietnam, the Philippines, United Kingdom, Egypt, New Zealand, the Solomon Islands, Papua New Guinea and New Caledonia.
