German car parts supplier continues investment in China with confidence
A new project of German tire manufacturer Continental AG’s Hefei plant in the capital city of east China’s Anhui Province, is currently in full construction mode. With advanced production techniques and product technologies, it is expected to commence operations in July.
This move signifies another investment by the world-leading auto parts provider in China, indicating that the plant’s annual output of passenger car tires will increase to 15.3 million from 13 million upon reaching full capacity by 2027.
The German company started building its first wholly foreignfunded tire production base in China as early as 2009. Over the past 15 years, the company has made significant strides, from establishing a bicycle tire plant to setting up the first training centre and evaluation centre in the Asia-Pacific region, as well as increasing investment in logistics automation and robotics, product innovation, and its total investment in Hefei has neared 10 billion yuan (about $1.41 billion).
“The continuous investment underscores our confidence in the Chinese market’s development. With the steady and rapid growth of China’s automobile market, our tire sales have been consistently increasing,” said Zhou Yuan, deputy general manager of Continental Tire Hefei plant, which is based in Anhui’s capital city.
Important production base
The Hefei plant serves as Continental’s most important production base in the Asia-Pacific Region, supplying over 90 percent of its products to the domestic Chinese market, Zhou added.
In recent years, the booming development of Hefei’s automobile industry, in addition to a series of supporting policies rolled out by the local government and talent advantages in the field, has further strengthened the company’s confidence in capital increase in China.
Growing as home to the automobile industry where leading automobile brands such as Volkswagen, NIO and BYD settled, Hefei has also sped up infrastructure construction, streamlined procedures, solved diverse difficulties, created a favourable development environment, and cultivated talents for the sector.
In addition, the rapid growth of China’s new energy vehicle (NEV) industry has also brought new opportunities to this traditional tire company, spurring it to accelerate transformation and innovation to satisfy new demands.
“The development of the NEV industry has led to the prosperity of upstream and downstream enterprises. It has also brought new requirements for tire products, such as tires with lower rolling resistance and adjusted materials and patterns to improve the range of vehicles and reduce noise. It should also be more durable and have a longer life, which is both a challenge and an opportunity for us,” Zhou said, adding that constant adaptions have also been made to match China’s emerging NEV models.
“Demand is the principal driver of our constant innovation,” said Zhou, noting that the company supplied 1.8 million tires for NEVs in 2022, and the figure surged to 2.9 million in 2023.
Speaking of the future, Zhou believed that China’s demand for automobile tires will keep growing in the next 10 to 20 years, therefore, they would further increase investment in the country.