Continental And Metro In Co-Branding Agreement
Continental and Indian company Metro Tyres, based at Ludhiana, are to manufacture motorcycle and scooter tyres for the Indian market under the joint brand name Continental-Metro. Metro MD Rummy Chhabra is reported as saying that, for the first three years, the agreement will be purely a technology arrangement but, after this period, the two companies might explore a possible equity partnership. At first, Metro will produce 100,000 tyres and tubes per month, aimed at 100cc and 110cc motorcycles, and the product range will later be extended to include tyres for 150cc and 180cc bikes.
The tyres will be made, using Conti technology, at Metro’s factory in Ludhiana, beginning in May. The agreement involves an initial investment of 30 crore Rupees (US$ 6.3 Million).
Both sides are excited about the arrangement, with Mr. Chhabra saying that it is the first technical tie-up in India between a local two-wheeler tyre maker and a major foreign manufacturer. For Continental, MD of the two-wheeler tyre business Jorg Essiger, said: “This is Continental’s first co-branding initiative and we believe that Metro’s low-cost production base and our huge brand name fit together perfectly in a two-wheeler intensive market like India.
” The tyres are currently being tested on Indian roads and will be sent to Germany for further testing. For the first three or four months, the target will be the replacement market, where the two companies believe the brand visibility will be greater. However, round about September, Metro plans to target the OE market and Mr.
Chhabra said that the company had already received enquiries from OE manufacturers. As well as supplying tyres for the domestic market, 50 per cent of the production offtake will be marketed by Continental, mainly in Europe and North America – these tyres will carry the Continental name only, rather than the Continental-Metro branding for the domestic product. Metro already produces its own brand tyres for both domestic consumption and export and the new brand will be marketed alongside this in the Indian market and, because exports will be sold under the Continental name alone, Mr.