Nikolai Setzer, Member of the Executive Board, Tire Division is talking to T&FME after he and Continental Africa & Middle East’s regional manager Ander Garcia, have just given an extended look at how the company is progressing in the region. Perhaps, appropriately for a tyre company, Continental is moving quickly in the region.
They’ve just announced that the German tyre and technology company (more on the latter, later) is opening its first-ever office in the Saudi Arabian west coast city of Jeddan alongside Almutlak Trade & Industries. It’s partnership Garcia feels confident will help the company extend its presence in the Kingdom’s market as well as bolster its bourgeoning regional standing. The visit also serves as an opportunity to officially inaugurate Continental’s (surprisingly) first warehouse in Jebel Ali which will immediately be plugged into a network of plants in Europe, North America and South America.
Globally, the tyre industry is developing beyond being a business concentrated on rubber into one that is embracing silicon to create products that use sensors and electronics to draw data that fleets can use to get a picture of how their vehicles are driving. For Continental there is an opportunity to bring together its knowledge in other areas such as chassis development, infrastructure and communications to get the tyres really talking.
The Middle East will get a taste of this future when Continental’s new digital tyre monitoring platform, ContiConnect arrives this year. Designed especially for commercial vehicles, the new platform is designed to improve uptime and will send alerts if a tyre’s pressure deviates from its normal running state. It is the next step in evolution after the debut last year of ContiPressureCheck – the first monitoring system for buses and trucks to continuously monitors tyre pressure and temperature via sensors placed inside the tyre – and Setzer says the company is well on its way to becoming more than just a tyre manufacturer.
“You might know us as simply on focusing on tyres, but we are now just 40% rubber and about 60% automotive. The entire tyre business is just one fourth of our company,” he tells T&FME, adding that Continental is riding the wave of a wider digital evolution.
(During the presentation it was revealed that Setzer’s Tyres Division accounted for 26% of sales in 2017, Chassis and Safety 22%, Interior 21%, Powertrain 17% and industrial specialist ContiTech 14%.)
“We are very close to the automotive industry, to the automated driving industry, to connectivity, all the electronics which is happening right now and the transformation which takes place in the automotive industry which is for us a unique situation, there is no other tyre manufacturer that has such a setup and that gives us the opportunity to be involved very early in new developments and new trends,” he says.
“We are in the middle of this amazing transformation in the automotive industry,” he continues. “You may have seen the Consumer Electronics Show in Las Vegas (held in January and where the company’s Intelligent Door System picked an honouree award) and you can clearly see where it is going. The car itself – the hardware – is one thing but the more important part is what comes with it. Nobody is looking at just a vehicle (anymore), everybody is looking at what does it mean in terms of services and software; how do you apply it?; where is the robotics?; where is the artificial intelligence?”
“Adding sensors into tyres can today measure tyre pressures and the temperature of the tyre but in the future, we will get much, much more information such as wear and the conditions inside the tyre. That’s where we are heading.”
Doors that monitor traffic by themselves and cars that drive autonomously are a long way away on the horizon for fleets more concerned with rising costs and an increasingly competitive landscape but ContiPressureCheck and soon ContiConnect are ready for them to use.
“We are striving for lowest overall driving costs which is obviously a pretty clear target of the fleet. Their tyre-related costs are still a relatively high portion if you add, not only the tyre purchase but the replacement, as well the fuel consumption – which is dependent on tyres,” remarks Setzer. “That’s not only the tyre performance, it’s obviously having a stable and level of temperature in the tyre so it helps the fleets to centrally control their fleet; they know where the trucks are; what is the air pressure; the best pressure they can use.”
ContiConnect will enable companies to view the data recorded from the sensor embedded in the inner lining of the tyre online. It you’re in a remote location you can send the results via a hand-held tool to again see the results. Setzer says that Continental is now looking beyond this process to anticipate failures.
“At a later stage than that, if we anticipate variability (in the tyre) we can tell them (the fleets); we can say ‘listen, you might have a problem soon’ – we look at the condition of the tyre and before you’ve got a flat tyre you are able to stop somewhere and exchange it. Uptime is the name of the game on construction sites, so increasing uptime; reducing fuel consumption and thereby reduce overall driving costs is our target and that’s for the benefit of fleets.”
Setzer argues that there is a real appetite, not just globally, within the Middle East to adopt this new approach to fleet management. Predictably, perhaps, the interest is being led by larger fleets with scale and resources but the smaller operations are also ‘connecting’.
“Where is the interest coming faster? It comes faster with a well organised, large fleets. They have a head office which aims to control and have the opportunity to use all those assets they have different servicing depots which they can manage. But we’ve got excellent feedback as well from smaller fleets because they’re seeing very fast that the additional investment into sensors and into software is rapidly getting compensated by higher uptime or lower costs,” he says. “And I don’t see any reason why, as it’s a trucking market as well in the Middle East, why this should not take place here. I mean imagine you are at 40/50 degrees Celsius with a truck outside, you don’t want to change tyre and you don’t want to be obliged to check your air pressure, it is clearly and certainly a service to make sure your fleet is running.”
Returning to focus on Continental’s operation he explains that technology development is bringing together the various strands of the company.
“(ContiCheck) is one of the areas where we are most closely working together on the one hand with the sensor guys and the connectivity guys which are in the interiors division where we make sure that we have a closed loop of information within the car,” he says. “We are extending this on the truck side but also on the power side and in the future the more and more data we generate we’ll add more information as a service for the driver.”
He adds that fleet companies shouldn’t be expected to keep on replacing their hardware with every new development coming out of Continental: “More and more we roll it out and through over-the-air updates we are capable with existing hardware of always adding new features and making our software system better.”
Even for a company of Continental’s wide range of interests, it has recognised that it needs to work with other partners, including those beyond the automotive sector. The most obvious example may be its initiative with telecommunications firm Vodaphone that is seeing them explore to use smart communication technologies such as 5G, cellular V2X and mobile edge computing to make roads safer. The two partners revealed at last year’s CEBIT event that they are already working on application scenarios at Vodafone’s 5G mobility lab.
“We are obviously building up our core competencies which we have thanks to our large portfolio in lots of areas of automotive driving and connectivity. And those two areas we see as the largest megatrends. But we cooperate with associated parties which are around it like telecommunications companies, for instance,” he explains. “We announced the cooporation with Vodaphone because obviously to connect cars and you need telecommunications and we are not a telecommunications company. So, you have to make sure that you team up with the other companies in the interfering infrastructure which is around. Everything we can supply by ourselves we do via our core business and for the rest we have to cooperate with the strong and big guys in the industries which are out there.
“We own our own tyres and – I mean as long as we sell them to the customer obviously – and the knowledge around it. This what we want to supply as a solution.”
Truck makers such as Daimler, Scania and MAN have all declared their ambitions to become service providers but while Continental is collaborating with OEMs, Setzer stresses the company that recorded $50 billion in sales in 2017 is carving out its own trajectory based on its own strengths.
“The knowledge about how tyres perform in the field; the knowledge about our tyres themselves, this is our unique mission which we have. Looking on the automotive side of the business, we believe we are the largest sensor company in the industry. On top of that we have connectivity: within our company; we have more than 15,000 software engineers and we believe that we have something substantial to offer. And whether the OEMs take our products or they use something else, later on, in the aftermarket we always have a good offer to present and it’s up to the fleets to make that choice.”
T&FME asks Setzer whether that there’s a danger the pace of technological advances could go too fast for fleets to be able to keep up.
“I think the name of the game is managing complexity,” he says before expanding on his point. “If you have a certain telematics unit, we, as a supplier, have to make sure that our software, our tyres and our system works as well with what the fleet has already installed. They will not change their whole hardware the next day and they want to have it integrated into that system as much as possible. And we are willing to do this.
“So, we are cooperating basically with all the large telematics providers; we’re working with larger fleets; and we don’t says one size fits all, we don’t just say buy only what we have, we are going out there and adapting, cooperating, in order to solve fleets with the complexity they have. Just going out and saying, ‘this is my stringent offering, you have to have it’, that will not lead to success. There are too many fleets out there. As you know, to get a vehicle market to completely renew takes a long time.
Time is short and the interview is drawing to close. T&FME wonders what Setzer replies now when people from outside the industry what sort of company he is running?
“If you ask us what company are you? We are saying we are a technology company. This is the over-arching scheme although clearly strongly related to automotive. But with the future and as the car gets more and more a consumer good, with electronics and so on, then it might merge into different areas like Smart Cities. So, it – Continental – becomes a mobility provider. A technology company as a mobility provider. That’s what is our answer to that.”
With his industry in flux and experiencing almost unprecedented change, is it an exciting time to be doing this job?
“Absolutely. Coming just from rubber and now shaping mobility is gives us a much broader scope than we have had in the past. This is where I focussed the presentation today. This is a very unique setup. You will not find any rubber company with such a strong automotive business – we are as being among the top three automotive suppliers – this business model is very difficult to copy.”