Continental on a roll in the Middle East

The region provides lots of opportunities to invest and grow the Continental presence

Founded and headquartered in Hanover, Germany, in 1871, Continental is a German multinational automotive parts manufacturing company specializing in tyres, brake systems and other parts for the automotive and transportation industries.

Continental develops pioneering technologies and services for sustainable and connected mobility of people and their goods. The tyres group sector has 24 production and development locations worldwide. Continental is one of the leading tyre manufacturers with posted sales of €11.8bn (US$ 12.48bn) in 2021 in this group sector.

Continental ranks among the technology leaders in tyre production and offers a broad product range for passenger cars, commercial and special-purpose vehicles as well as two-wheelers.

To bring us to current on the company’s regional operations, Global Supply Chain conducted an exclusive, wide-ranging, one-on-one interview with Karel Kucera, Managing Director, Continental Middle East. The following is the transcript of the interview.

Global Supply Chain (GSC): How significant is the Middle East for Continental and which are among the top three countries in terms of sales?

Karel Kucera (KK): The Middle East is an important market for Continental. The population is growing; individual economies are rapidly developing and customer purchasing behaviour is changing as well. The Middle East region offers significant opportunities for Continental products, services, and solutions. It’s very diverse, so it is also a very important area where we can test various services and solutions.

The volume of sales is usually driven by size of population and size of the car, and number of cars in the market. With these parameters in mind, our top countries in terms of sales being the most populated countries in the region and alphabetical order are Egypt, the Kingdom of Saudi Arabia, Pakistan, and the UAE.

One of our strategic pillars for the Middle East is to build our sustainable future on strong cooperative relationships with our partners in the region. Together with them we develop our market presence in order to be able to anticipate market trends, develop innovative and local solutions and to reply to customer needs.

That is why, in addition to the market’s potential, we view the ability and willingness of our partners to develop the business together as key when it comes to importance of countries. Our approach is to build cooperative relationships with our partners and to be close to our customers.

GSC: How has Continental Tyres ME currently fared in 2022; how does that compare with 2021 and what is your outlook for 2023?

KK: 2022 was a turbulent year for Continental. Covid was still impacting the world, mainly within the supply chain area. Geopolitical uncertainties, availability of raw materials and related price increases, along with surging energy and logistics costs; and these were heavily affecting our business and that of our partners. On top of that, we were facing changes in import legislations

Continental Middle East

in Egypt, continuous forex shortages in Lebanon and Iraq.

On the other hand, despite the challenging environment, we also have many positive stories. We launched ContiSportContact 7 for the Middle East region. This is our flagship, state-of-theart, ultra-high performance (UHP) tyre, which was engineered to give the driver confidence to be able to push the limits further and further.

The ContiSportContact 7 is not only a great performing tyre, confirming its top performance in many recognised tests, its good looks have earned it the worldrenowned design prize, an iF Design Award.

Together with our UAE partner, Emirates for Universal Tyres, we have seen the launch of the BestDrive retail network brand in the Middle East and inaugurated the first BestDrive tyre and service centres in Dubai, Abu Dhabi, and Al Ain. BestDrive by Continental marks a new era for Continental in the Middle East. It enables us to access to customers who experience our products and reinforces our market footprint in the UAE.

We also extended our Middle East footprint by signing a partnership agreement with YK Almoayyed & Sons (YKA) in the Kingdom of Bahrain.

In addition, Continental is launching more and more sustainability components, with tyres containing polyester from recycled PET bottles now available to all dealers in Europe. Continental introduced its ContiRe.Tex technology, which makes it possible to completely replace the polyester conventionally used in the tyre casing, into volume production in April 2022.

We currently offer three models featuring polyester from recycled PET bottles, each available in five sizes: the PremiumContact 6, the EcoContact 6 and the AllSeasonContact year-round tyre.

So, all in all it was an amazing year, and I would like to share my appreciation and thanks to our partners as well as our Continental team in Dubai, for their incredible dedication, resilience, flexibility and strong cooperation.

We all know that Middle East is well known for unpredictable surprises. 2023 will definitely be a challenging year again. But I believe we are going to witness various developments based on the country clusters. Gulf countries will continue to enjoy quite a strong year. End consumer

Karel Kucera, MANAGING DIRECTOR, CONTINENTAL MIDDLE EAST

Karel Kucera is a Continental veteran of over 20 years, taking the role of Middle East Managing Director in early 2019, to oversee more than 19 markets across the region. Under his leadership, Continental expanded the BestDrive brand across the UAE.

Prior to his Middle East role, Kucera held a variety of roles at Continental, serving as Managing Director of ContiTrade Central & East, Northwest Europe; and several roles within the sales and marketing divisions, across both the Passenger & Light Truck Tyres (PLT) and Commercial Vehicles Tyres (CVT) Business Units.

sentiment seems to stay positive. Diversification of economies and oil price level will support the growing trend. On top of this, the UAE is going to host COP 28 this year, which will be a great event and a clear demonstration of the direction and seriousness of the approach in terms of sustainability and green economy. Meanwhile, a high inflationary environment will be a challenge for other countries in the region.

GSC: Tell us more about your corporate partnerships with your peers and particularly the governments in the region?

KK: We are always very keen to establish collaborations with private and public organisations around the ecosystem of the automotive industry, particularly on the topic of Road safety. This aligns with our strategic pillar of ‘Vision Zero’, which refers to zero accidents, zero injuries, and zero fatalities – this mirrors the UAE’s vision 2030 for road safety.

We have several collaborations with the RTA, organising road safety awareness campaigns. Recently, alongside Dubai

Police, we organised a roundtable discussing “AI Driving Technology”, with our partners, AV Living Lab, and Location Solutions.

Hosted at the AI Driving Hub, based at Dubai Police, General Department of Traffic, the event brought together major executives from a range of sectors such as transportation, logistics, and mobility services to discuss how AI technology and the Metaverse can be used to tackle road safety by correcting driver behaviour through a personalised data-scientific approach.

GSC: Going forward, what are the opportunities and challenges for Continental Tyres in the region?

KK: We are constantly innovating and have a broad portfolio of tyres to suit a multitude of car brands stay safely on the roads. We plan to partner with more esteemed brands on a product level but also as part of our mission to continue on our journey towards achieving ‘Vision Zero’, our ambitious goal to be reached in three successive stages: evolving from best in braking to zero fatalities, zero injuries and zero crashes.

With the ongoing rise of the intelligent car, tyre technology and increased connectivity there is more potential than ever to reach Vision Zero in the region.

The Middle East is a region with growing populations and individual economies, which we see as an opportunity for increase in demand for automotive products. Growing demand for electric vehicles, especially in Gulf countries, or in Jordan, is bringing opportunities as tyres for electric vehicles needs to be fulfilled following higher demand.

When it comes to electric vehicles, Continental tyres are particularly popular. We have received original-equipment approvals for more than 300 different vehicle models already, and seven of the 10 most successful manufacturers of electric vehicles worldwide rely on Continental tyres for their original equipment. Overall, the company’s market share in the electric vehicle segment is higher than for cars with combustion engines.

Another trend which we are observing and see as an opportunity is the change in customer behaviour. Customers are looking more for convenience once it comes (not only) to mobility. Online ordering, mobility solutions, one stop shopping, peace of mind, professional service, and a branded retail network are the most decisive factors of the customer journey.

GSC: Why is Sustainability important for Continental as part of your CSR indicators?

KK: The footprint of Continental tyres is significant – almost every third car in Europe is delivered with our tyres. And with every set, our responsibility for people and the planet grows. The topic of sustainable transportation is not only high on our agenda right now, it is deeply anchored in the foundation of our values.

We are convinced that sustainable and responsible business increases our ability to innovate and be prepared for the future and that it is our task to stay ahead of the technology to contribute to a decarbonised tomorrow.

Our sustainability focus is not only about the product itself – we look after the whole value chain, from material sourcing right through to end of the life of our products. It’s not just about corporate social responsibility – it’s everyone’s duty to make the effort to be considerate of the environment – as a business, we also share that obligation. Sustainability underpins our ‘Vision 2030’ growth strategy. We have adopted a comprehensive framework to drive our ongoing transformation, starting from our strive for a 100% carbon neutral value chain to our longer-term goal of a 100% emission-free mobility.

For example, as of 2022, we have enabled the use of reprocessed polyester obtained from recycled plastic bottles in our tyre production. With the global increasing demand for natural rubber, we are constantly looking at viable and responsible alternative sources. Our dandelion-derived rubber is a sustainable alternative to natural rubber and we have plans in place to begin manufacturing consumer road tyres made from dandelion-derived rubber in five to 10 years.

Our efforts in the sustainable direction have again been recognised by the global non-profit organization, CDP, for working to mitigate climate change and ensure water security. By improving climate change mitigation score from B to A-, we have been awarded leadership status in this category for the first time.

GSC: Are you considering the possibility of setting up manufacturing facilities in the region?

KK: We strongly believe in the Middle East region. We see it as a region with lots of opportunities to invest and grow our Continental presence. That is why we have recently set up our entities in Dubai, Jeddah and Casablanca (Morocco). We invest in our product portfolio as well as services and solutions for our partners, fleets and end consumers.

In addition, with the latest investments in new production sites. in Thailand, and the U.S., we currently have sufficient manufacturing capacities for the coming years.