Continental is Expanding its Electronic Production at the Kaluga Site

Continental, the international automotive supplier, is investing in the rapidly growing Russian automotive market. Our aim is to be the leading international supplier of electronics in this vehicle market, said José Avila, head of the Powertrain Division and member of the Continental AG Executive Board. This is why Continental is investing in the expansion of its production facilities at the Kaluga automotive production site which will largely produce engine control units but will also manufacture components for use in fuel supply and injection systems. The local company, which has so far traded under the name of 'AVTEL', will be renamed Continental Automotive Systems Rus. on July 5, 2011.

New production line for engine electronics

Continental will invest more than €6 million in the construction of a new production line in the existing Kaluga electronics plant. The aim is that this should expand production capacity to at least one million engine control units annually. Therefore an investment agreement was signed today with the governor of the Kaluga region. More than 120 highly-skilled jobs will be created in Kaluga. There is an increasing demand in the emerging markets for high-performance and economical electronically controlled engine systems. Tighter emissions requirements are partly behind this increased demand, said Gerhard Böhm, head of the Engine Systems Business Unit in Continental's Powertrain Division. When developing these efficient and, moreover, inexpensive systems for the automotive growth markets, which includes Russia, Continental's Powertrain Division can rely on the wealth of know-how it has accumulated in the traditional automotive markets. At the heart of the technology which we will be producing at the site in future is our innovative 32-bit Easy-U engine control unit, Böhm continued. The control unit module is extendable and can, therefore, be flexibly adapted to the relevant vehicle architecture by means of software upgrades.

The rapidly growing Russian vehicle market: around 50 percent plus expected

The Russian vehicle market is one of the fastest-growing such markets in the world. Whereas at present, about 230 in every 1,000 Russians own a car, this figure will increase by over 50 percent to 375 by the end of the decade. By comparison, the figure for Germany is just below 500. However, it will only be three to four years before the Russian vehicle market overtakes another aspect of the German market. We're expecting sales of new cars to reach 3.5 million by 2015 and as high as 3.75 million by 2020, explained Christian Kögl, head of Continental Powertrain Russia and CEO of Continental Automotive Systems Rus. Annual sales of new cars in Germany will be around the three million mark. With annual growth rates of 12 to 16 percent, the Russian market is one of the strongest in the world, Kögl emphasized. In addition, Continental’s passenger car tire division is investing in existing as well as new production facilities in Kaluga, attesting to the strategic relevance of the Russian market and the attractivity of the Kaluga production site.

The growth in Russia is linked to a major expansion of the vehicle industry in Russia. The national government and other regional public bodies are using tax incentives to encourage foreign vehicle manufacturers and suppliers to set up sites in Russia. Several European high-volume manufacturers, for example, are planning to build new vehicle plants in the Kaluga region. To qualify for incentives, they must be capable of producing at least 300,000 to 350,000 vehicles and 60 percent of the components installed must be produced locally.