A little over a month after acquiring Modi Tyres to pave the way for its solo entry into India, the world's fourth largest tyre manufacturer, Continental, announced a Rs 330 crore investment to double its truck and bus tyre capacity, while commencing production of passenger car radials.This is more than twice the amount that Continental paid to buy Modi Tyres (Rs 122 crore) and significantly higher than what it takes to set up a similar greenfield capacity in India.
"We are convinced that radialisation will be the driving force in the Indian truck market, and our investments would prepare a solid base to meet that demand," said Nikolai Setzer, head tyre division, Continental AG. "But this is not the end, it is a start. I am convinced in future, we would have to invest in multiples of what we are doing today."
Demand for commercial vehicle tyres in India is slated to grow from 17.81 million in 2010-11 to 25.42 million in 2014-15, reason enough for all major tyre companies in the world including Bridgestone, Michelin and Goodyear to pay more attention to India.
But in a market dominated by the likes of MRF, Apollo, JK tyre and Ceat, all home grown, growth for new entrants may not be a given.
"Increased competition will always benefit the industry and the users and I bet it will only intensify," said Andreas Penkert, CEO, Continental India. "Though the tyre sector has opened a lot, it is still maturing. Newer players would mean more options to consumers alongwith better more technologically advanced products."