Dr Andreas Esser, Continental AG’s CV Tyres Business Unit head, speaks to Shobha Mathur on driving truck and bus radialisation in India.
14 Apr 2014 | 6520 Views | By Shobha Mathur
Dr Andreas Esser, Continental AG’s CV Tyres Business Unit head, speaks to Shobha Mathur on driving truck and bus radialisation in India.
In which product category do you foresee Continental’s growth potential in India?
Historically, we have been with passenger car tyres because we have been selling them since ...
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Dr Andreas Esser, Continental AG’s CV Tyres Business Unit head, speaks to Shobha Mathur on driving truck and bus radialisation in India.
In which product category do you foresee Continental’s growth potential in India?
Historically, we have been with passenger car tyres because we have been selling them since 2008 in India through imports. With the acquisition of Modi Rubber Company, we had the capacity for TBRs and bias truck tyres and we are using this location (Modipuram) to build it up.
We see an opportunity in the development of radialisation in the Indian tyre market which is already much progressed in passenger cars but not so much in TBRs.
How many new products do you plan to bring to India?
The next step is to upgrade to the next generation of bias tyres; this will depend upon how the market develops in terms of radialisation and particularly on how OEMs develop their trucks. If they choose to diversify the truck sizes and specifications, we have to do the same in the replacement market.
How do you see the growth of radialisation in India compared to global markets?
Radialisation is relatively low in India compared to most markets and its speed is average. It could be faster; it was a lot faster in China due to the government directive. In India, the market is developing, so it depends on what the customer really needs and that takes a little time.
By 2019, there will probably be 50 percent radialisation and maybe in another 5-10 years it will come close to 100 percent in India. But the infrastructure also has to change and has to be fit for radial tyres. Probably in some parts of the countryside, 10-20 years later, bias tyres will still be needed.
How do you perceive the changing trends in tyre technologies?
The major focus is on durability and mileage but the fleet business in Europe and America has a different concept based on driving costs. So even though the tyre is a little bit more expensive because of the material it is made of, the operating cost is lower. This brings down fuel cost, which means you would probably like to buy a more expensive tyre and save on fuel later. I am sure it will happen in India also, where you will look not only for durability and mileage but also at rolling resistance of the tyre which affects fuel consumption.
What is Continental’s roadmap to expand the dealer network from the current 800-plus?
First, we have to know all the dealers and understand which are the good ones that are going into radialisation. We already have a lot selling our bias tyres. We would like to offer them radial tyres so that they can offer both products to the same fleet. We need to have those dealers who are willing to upgrade into radialisation speedily to have lower driving costs.
However, more than the quality of dealers, we need to focus on selling radial tyres, which needs competence. You need to explain to the customer the value of the tyre, not what the price is; so it is a different concept. Here we need to work together with the dealers to strike this understanding. In India we have separate dealers for trucks and passenger cars.
Would you look at exporting tyres in future?
Usually, we have a concept of local production due to high fuel prices that affect transportation. So we would look at exports to neighbouring countries like Pakistan, Bangladesh and Sri Lanka. But we have to see how much this can be utilised as there has to be a balance of efficiencies and transportation costs. At present, we have no plans of export as we have to look at capacity that is available. We need to look at the product portfolio. For the time being, we have four radial sizes in India while in Malaysia we have a much wider product range that is supplied to other markets. So we need to see whether we can replace those products in Sri Lanka with products made in India.
As soon as you add more product sizes, you add to the complexity and make it less efficient, so we are careful of not looking at exports in the ramp-up stage. Maybe at the end of the ramp-up stage, we can look at it.
Where do you see yourself by 2025 in India?
We hope that we will be able to fill total capacity of a million TBR tyres by then. Today we have a capacity of a million bias tyres and are looking at the same direction for TBRs. The market is of 15-20 million, so one million is a five percent market share and not really a dominant position.
How do you see the Indian market growing?
In normal countries the growth rate is 3-4 percent but in India due to economic development it could be 5-6 percent and we want to grow in sync as there are some competitors in the market who are already big.