SHANGHAI -- Continental AG will open a new plant in Jinan in Shandong province to feed growing demand for interior electronics for commercial vehicles.
The wholly-owned factory will make instrument clusters, body electronics -- including fuse and relay boxes -- and vehicle control units. The company declined to give investment figures.
The plant will supply 35 percent of the commercial vehicle market in China, says Francois Schoentgen, Continental's chief of commercial vehicles and aftermarket in China.
Until now, Continental has produced components for both commercial and passenger vehicles at its Wuhu plant. But as sales grew, Continental decided to make car components in Wuhu, and truck components in Jinan.
"My declared strategy for commercial vehicles is wholly owned plants," Schoentgen said.
The new plant in Jinan is located near commercial vehicle manufacturers Sany Group and Xuyong. "We are where our customers are," Schoentgen said.
In China the company has five factories that produce interior components. Continental Automotive Wuhu Co. is the German supplier's only joint venture; Continental owns 88.2 percent of it.
Sales of commercial vehicles in China are booming.Government initiatives to build up infrastructure have led to increased demand for trucks.
According to J.D. Power and Associates, 803,574 trucks and buses were sold in the first 7 months of 2010, up 76 percent over the same period last year.