Auto parts supplier Continental ramps up expansion in China

Article by Anita Panait, on May 11, 2012

Continental, the German tire manufacturer and supplier of auto parts, is proceeding with its expansion in China as it remains upbeat with its future in Asia’s largest economy despite the dampening of the Chinese market. Continental has been ramping up its R&D in China to create products that would cater to domestic demand.

The company is also locating some global development functions in China. Continental has also based its new low-cost car technologies research in China. This rapid expansion in China has the tire manufacturer hire around 375 new employees every month since 2010, according to Continental China President Jay Kunkel. Still hungry for expansion, Continental disclosed on May 7 that it would hire around 5,000 new employees in China by the end of 2012.

However, the condition in China may be dampening, as vehicle sales in the country soared only by 2.5 percent to 18.5 million units in 2011, a far cry from the 54-percent and 33-percent increase in sales for 2009 and 2010 respectively. The Chinese market suffered a letdown for the first three month of 2012, with total vehicle sales suffering a 3.4 percent drop. Continental, however, downplayed the trend as a breather.

As proof of its optimism in China’s continued growth, Kunkel said at the Automotive News China Conference in April that he expects the number of assembly plants in the country to increase from 120 in 2011 to 142 in 2015, around half of which will be of local China brands. Kunkel forecasts Continental’s sales in China to go up from EUR11 billion in 2012 to more than EUR21 billion in 2016. Kunkel remarked that the key for this growth is not just volume but primarily value. This could be done by investing in R&D facilities for a rapidly maturing market.

Topics: continental, china

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