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AUGUST 3, 1998

Continental eyes F1

GERMAN tiremaker Continental AG says that it is interested in becoming involved in Grand Prix racing in a few years - but may be considering accelerating its plans because of the availability of top teams Williams and Ferrari, which will lose Goodyear tires at the end of this year.

Although Goodyear's sporting bosses have tried to get the management in Akron to change its philosophy there is no sign of any progress being made to keep the company in F1. The Goodyear top management has adopted the nonsensical belief that they can pull out and come back in a few years at the same level without realizing that getting back teams like Williams and Ferrari is not the work of a moment.

It seems that Michelin has given up its ideas of returning to F1 following market research in France which revealed that around 60% of the population already believes that Michelin is in F1 and is being successful. There is no marketing logic in spending the money when the company already has a sporting image.

The fact remains that Goodyear's withdrawal creates an extraordinary opportunity for a new tiremaker to come into F1.

The Hanover-based Continental AG firm first entered F1 in 1954 with Mercedes-Benz and won the World Championship that year and in 1955. Mercedes then pulled out but Continental continued as a tire supplier until 1958. Continental has been a major player in the world's tire markets since it bought General Tire in America in 1988 and today it is the world's fourth largest tire company after Bridgestone, Goodyear and Michelin.

In recent years the company has been considerably restructured under ambitious young chairman Hubertus Von Grunberg and last week announced strong first half-year pre-tax profits up 62% to $190m

There is no doubt that it would be a good moment for a German tiremaker to break into F1 because of Michael Schumacher's presence at Ferrari and the forthcoming deal between Williams and BMW. On the other hand Continental has no specialized knowledge of racing tires, although such expertise can be bought if necessary by hiring engineers from other companies.

While strong in Europe and America, Continental and General Tire have been trying to build up sales in Asia, where it works in association with the Japanese company Autobacs. It is also diversifying into other industries so that it only partly dependent on the tire industry. Last week the company bought the brake businesses of ITT Industries and is now a big player in the world's brake businesses.