HANOVER, Germany-Continental A.G.'s efforts to develop its vehicle component systems activities into a stand-alone business unit have started paying dividends with new contracts.
The company has landed two automotive suspension development contracts worth an expected $39 million in annual sales and has built up tire/wheel assembly capacity to 10,000 units a day at four locations in Europe.
The business unit, headed by former ITT Teves executive Hans-Albert Beller, also is pursuing projects in Europe and North America that would double or even triple the tire-wheel assembly capacity, a development that could benefit the company's tire business as well.
The division, Continental Fahrzeugsysteme (Vehicle Systems) GmbH, overlaps with several ContiTech non-tire business units but also is branching out into business areas where Conti has not been involved. Three systems development units have already been created: CASS-Continental Air Suspension Systems; PANC-Passive and Active Noise Cancellation; and CECC-Continental Electronic Chassis Control.
The development comes on the heels of an agreement between Conti and Temic Telefunken Microelectronic GmbH-a supplier of electronics, sensors and control systems-to develop component systems in the areas of vibration-isolation, acoustics, ride and handling, and vehicle testing.
Beller and Conti Chairman Hubertus von Gruenberg predict the unit's sales will top $250 million annually by the turn of the century. Conti declined to reveal specifics about the two developmental contracts, although they were discussed at a recent press conference in connection with prospects for air suspension systems, with special reference to luxury cars.
The unit recently settled into refurbished research and development quarters at Conti's Stoecken factory in suburban Hanover. The firm invested $6.5 million this year to create the 17,000-sq.-ft. center out of a warehouse.
A key addition to the management team is Pavel Rajmis, director of research and development for the division, who joined Conti Oct. 1 from Bugatti Automobiles.
Conti currently has four tire-wheel assembly ventures running-capable of producing a total of 10,000 units a day-and is negotiating further ventures in Belgium, France, Spain and the U.S. that would represent between 10,000 and 20,000 daily units, according to Beller.
The executive said business opportunities in this field exist whenever a new plant is built or an existing one is renovated.
Establishing such ventures is connected with securing long-term contracts, at least through the life of the vehicle being supplied, Beller said. Such an arrangement allows both tire and wheel manufacturers to secure longer-term supply contracts, and gives Conti's tire division an additional discussion partner at the vehicle companies.
Although original equipment tire supply traditionally is a money-loser, Conti pointed out the tire-wheel assembly business is at the break-even point during this early stage of development, and Beller emphasized Conti ``is not in this business to lose money.''
To date, Groupe Michelin is the only other tire maker active in this type of business. In France it has its own capacity, and in Italy it recently opened a joint venture with Pirelli S.p.A. near Fiat S.p.A.'s newest assembly plant in Melfi.