Elmar Degenhart, chairman of the board, Continental AG, talks about company's future plan and the strategy they plan to undertake for expansion in new markets.
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Below is the edited transcript of his interview to CNBC-TV18.
Q: Continental contributes a lot to the automobile industry; it makes tyre, powertrains, batteries, car panels and meters. According to Continental how the future of of the automobile industry does looks like. Could you break up the future of the auto industry in the US, Europe and emerging markets (EMs) where you operate?
A: We are a global company and we have three pillars. We are ranked number four in passenger car tyres segment. And we are also well known for our premium brand
Secondly, we have a strong footprint in the automotive systems business. Two-third of our turnover comes from the automotive systems and electronics is our largest product area. We are strong in supplying electronics in the area of chassis, power trains but also interior. We generate more than 50 percent of sales from electronics in system side. The third pillar is supplying all kinds of rubber products to the industry but also to the automotive sector.
Q: How do Europe, America and emerging markets look?
A: Volumes are down in Europe. I think we have reached the bottom and we expect next year to be stagnant, maybe a further decrease of 1-2 percentage point. The North American market will grow next year towards 16 million again, South America will stay stable. We are looking at Asia for growth.
Q: In which segment in Europe do you see recovery coming first?
A: The passenger car market will start to see recovery in 2014. The truck market will follow accordingly.
Q: You mentioned that Europe will possibly decelerate this year and next year, yet you forecast that Continental revenues to grow by 5-6 percent in coming year? From where will this growth come from?
A: The automotive market can grow by 2 percentage points.
Q: Will you grow faster than that?
A: We are definitely growing faster because of our strong footprint on the electronic side and our investment program into tyres and rubber products.
Q: If America hits the fiscal cliff and taxes are increased and government spending is lowered. Then, what is your prospects for the American market?
A: I am convinced that North America will resolve its problems. Fiscal cliff will not be an issue. The North Americans are optimistic by nature. So, it is important that the government is sending positive signals that they can be in the driver seat with regards to consolidation, means reducing the debt and for sure they have to raise taxes but it will concern more to the wealthy people. I believe even increase in taxes would be seen as positive and would stimulate the market.
Q: Do you think that your forecasted growth of 3 percent will come despite European slowdown and be made up by growth in America and in Asia?
A: True.
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