Conti to End Argentina Licensing Partnership
At the end of July Continental’s existing tyre production arrangement in Argentina comes to an end, and the company has plans to replace this current licensing deal with a direct subsidiary. Tyres sold in this market will henceforth be sourced from elsewhere.
The soon to be established commercial subsidiary, which should be up and running some time during the second half of 2008, will operate in place of Conti’s arrangement with Fate Argentina, which currently holds the licence to produce Continental products in that country. Fate, the country’s largest tyre manufacturer, entered into a technical and commercial exchange agreement with Continental in 1998, and has been producing Continental brand tyres for the Argentine and export markets since the following year. It has also acted as the exclusive distributor for premium Conti products imported from Europe or North America.
In hand with Conti’s plan to go it alone in Argentina is the decision to rely to a larger extent upon imported tyres. The company will apparently bring in the bulk of tyres it sells from its manufacturing facility in Brazil, as well as from Europe. Tyre production figures for Argentina already hint at a slight decline this year, with output to the end of May at 4.8 million units, compared with 12.2 million during the full year of 2007. However the end of the arrangement with Fate will not necessarily further decrease national output, as the option remains for Fate to produce tyres for export.
Domestic tyre consumption in the first four months of the year, according to official figures, reached 3.9 million units, 19.2 per cent more than the same period in 2007. The country’s automotive industry is said to be enjoying a period of expansion, with official statistics from the Argentine census bureau INDEC showing 6.8 per cent growth in the first quarter of 2008 compared with the same period the previous year.