By Namrita Chow, Automotive News Europe
Shanghai, China -- Continental AG's acquisition of Siemens VDO in 2007 doubled the company's presence in China -- and further expansion is on the way, including in the tyre sector.
The product portfolio of Siemens VDO complemented products made by Continental, says Jay Kunkel, Continental AG's Asia president.
For example, the company can now supply powertrain management for diesel and gasoline engines.
The company employs around 9000 people in China, but this number will soon grow. By 2010, the company expects to more than double sales in China, says Kunkel. Kunkel declined to reveal sales figures.
As the company expands, localisation of part production increases. "We try to localise wherever possible," says Kunkel.
In 2007, 20 percent of the company's China production was exported. Exports went to North America, Europe and to other Continental manufacturing sites in Asia.
Meanwhile, Continental is "investing in local technical centres to develop market specific solutions," says Kunkel.
A new engineering centre in Shanghai's Yangpu district will be ready in the second quarter of 2009. The 14-story building will also be Continental's new Asia headquarters.
In Shanghai's Jiading district, Continental is adding an engineering centre with bench testing facilities. The center will open August 2008 and will employ 300 people.
The two new facilities have a total combined investment tag of 60 million euros (659 million yuan).
In other expansions, a new hydraulic brake systems plant with an approximate annual capacity of 4 million calipers and 2 million actuation units will open early July.
The hydraulic brake plant is in Changshu, near Shanghai. The plant will manufacture for China and will also export to Japan and Korea, says Kunkel.
Full capacity is expected to be reached by 2010. "We have room for expansion," adds Kunkel.
Continental has been making brakes and calipers in China since 1994 at its joint venture with Shanghai Automotive Industry Corp.
A new tyre plant in Hefei, Anhui province, will focus on the China market. The factory, to be operational by 2010, represents an investment of 150 million euros (1.6 billion yuan).
Plant construction will begin mid-year with tire production expected to start by early 2010. The plant is expected to make nearly 1 million tyres in the first year of production, with annual capacity eventually growing to 4 million units. The plant will employ more than 1100 at full capacity.
In China, the company has more than 60 customers, including Dongfeng Peugeot Citroen Automobile Co., Geely Automobile Co, Chery Automobile Co, Great Wall Motor Co., and Tianjin FAW Xiali Automobile Co.
"Chinese OEMS are going to have very strong growth," says Kunkel.
China growth will be driven by four major global trends: environmental concerns, safety, information and affordable cars such as the Tata Nano. Continental will supply fuel systems for the Nano, under development by Tata Motors of India.
"Low rolling resistance tyres will come to China as environmental issues get more important," says Kunkel. Navigation systems will also see growth as "driving more efficiently, more effectively reduces emissions."
He also expects growth in powertrain management as Chinese automakers strive to clean up their engines.
From Automotive News Europe (A Crain publication)