Continental Tire the Americas Gearing Up for Growth in 2010

Just as it takes a steady hand to navigate the waters of the Caribbean, Continental Tire the Americas is taking the same approach to its near-term efforts in the North American market, reports Tire Review. No major changes, no major announcements, just subtle adjustments and the addition of two new tyres highlighted its Gold Program Dealer Meeting, held during a three-day Caribbean cruise the 258 Gold Program dealers earned.

The business portion of the meeting was opened by Bill Caldwell, vice president of sales and marketing, at the helm of his first Gold Dealer meeting since replacing Andreas Gerstenberger last year as head of CTA’s consumer tyre operations. Caldwell gave a brief overview of Continental AG’s corporate organization and leadership, and a look at where the U.S. tyre market appears to be heading. As was the case with every tyre-maker, 2009 was a down year for CTA, though it did see some segment share gains, Caldwell said. And the first quarter of this year showed promise as the company was up vs. 2009 certainly, and even got ahead of the pace set in early 2008 before the downturn began.

CTA saw a 59 per cent improvement in its UHP sales last year, even as the premium segment stalled, he said, and its General Grabber A/S saw 160 per cent growth versus 2008 sales. Winter tyre sales, too, improved in 2009, up 21 per cent versus the year prior. Caldwell pointed out that the RMA’s estimates for 2010 are “very conservative” in his mind, though he is still exhibiting some caution right now. “We’re in a very challenging period right now,” he said, “because our inventory levels are low.” Last year’s industry-wide retrenchment and inventory burn left tyre0makers with tighter available inventory heading into 2010. As orders began piling up, tyre-makers – CTA included – have had to crank up production, but with one eye on prevailing conditions lest they build up too much inventory.

After the meeting, Caldwell told Tire Review that capacity investments for its plants in Brazil, Mexico and Mt. Vernon, Ill., which were “paused” last year, have been reactivated, and that dealers should see a marked improvement in fill rates in the second half of this year. “Step by step, we’re going to improve,” he told dealers.

Driving Awareness

Caldwell took the wraps off CTA’s new tagline for its Continental brand: “Innovative Technology. Driving Confidence.” As Travis Roffler, marketing director, later explained to dealers, much of the focus in 2010 will be on building recognition and awareness for the Continental brand. The new tagline, which came out of a series of consumer surveys and focus groups, supports the brand’s intended premium position and strengthens the Continental brand’s technology message. Roffler also took some time to outline two major promotional deals to support the Continental brand in coming years: sponsorship of both the Grand Am race series and of Major League Soccer in the U.S. and Canada.

The Grand Am sponsorship includes title sponsorship of the Grand Am Series in 2010-13, and as the exclusive tyre supplier – with Continental race slicks and wet tyres – for the Rolex Grand Am series in 2011-13. CTA plans to leverage its top-level race participation with consumers through a national advertising campaign – television and print – event presence, and a number of opportunities for dealer tie-ins.

Not only is Continental the official tyre sponsor of the MLS, it is also the official tyre sponsor of the MLS’ 18 teams, a significant advantage, Roffler explained, in stadium signage and tie-in opportunities. Continental tyre commercials will also run during the MLS’ national and regional TV coverage, and there will be a number of in-market promotional and dealer tie-in opportunities, he noted.

CTA had been pursuing the sponsorship opportunities for some time, Roffler explained, and the economic downturn actually helped CTA realize both at considerable savings. The MLS sponsorship was particularly timely as Continental AG is a major corporate sponsor of soccer’s World Cup, which will be contested in South Africa this June, and will attract a worldwide television audience of billions.

The General brand will continue its motorsport relationships in both major off-road race series, as well as with the Lucas Oil program of dirt track, tractor pull and short-course off-road racing, he said. Roffler previewed two new Continental brand TV spots that will support its MLS and Grand Am ties, and a new General brand light truck spot tagged “Anywhere is Possible.”

New Rollouts

On the new product front, product planning manager Joe Maher unveiled the Continental ContiProContact Eco Plus, the company’s first eco-oriented tyre line, and the General Grabber, a street legal version of its popular off-road race tyre. Available May 15, the ContiProContact Eco Plus touring tyre features a new tread compound with “temperature activated functional polymers” for improved tread wear and lower rolling resistance, and silane additives for enhanced grip and braking on wet roads. The all-season touring tyre, which replaces the non-OE ContiProContact Touring, promises improved fuel economy, reduced CO2 emissions, longer tread life and better wet braking performance compared to other leading brands, he said.

The tyre will be available in 22 T-rated sizes – 15- through 18-inch wheel diameters – with a 600 AB UTQG, and it will carry an 80,000-mile treadwear warranty, a road hazard warranty, and 72-month warranty against manufacturing defects. The ContiProContact Eco Plus is the first in a series of eco-oriented products from CTA, Caldwell told Tire Review after the meeting. CTA will develop an “eco story” with each new product to illustrate where the “green” features of its Continental and General products are “competitive with or better” than those of competing brands. “We can’t afford not to be involved” with more fuel-friendly tyres, Caldwell said. “We have the technologies and capabilities. We don’t want to get lost.”

The street legal Grabber is an “extreme traction tyre,” said Maher, and features three-ply reinforced construction. Its aggressive tread features a “strake and groove” design to deliver more biting edges, enhanced water dispersion and a wider footprint. Size data wasn’t available yet for the raised red letter Grabber.

Sales director Jim Sicking illustrated how CTA has “right priced” its products competitively in the market to deliver higher margins and profit dollars to dealers compared to leading competitive brands. He showed some comparison models pitting the ContiProContact Eco Plus and the ContiExtremeContact DW against competing Goodyear, Bridgestone and Michelin products, each showing margin and profit gains for the Continental tyres.

Sicking also reviewed changes to CTA’s field sales force, noting that the company has combined its 18 dealer channel field reps with its car dealer channel group, creating 24 sales territories in four regions. The smaller territories effectively bring CTA closer to its dealers, he said, and allows the company to better service all of its replacement market channels.

Sicking also introduced the new members of the Gold Distributor Council: Mike Finley of Englewood Tire, Leon Sawyer of American Tire Distributors, Shawn McKenzie of Summit Tire, Chris Links of K&M Tire, Rich Robinson of Tires Warehouse, Rick Ahern of Cassidy Tire, Terry Magaldi of S&S Tire, and Dave McSally of Dunn Tire.

The new Gold Dealer Council consists of Ray Bryson of Pope Davis, Richard Richardson of Best For Less Tire, Nate Zolman of Zolman Tire, Kevin Griffin of Brothers Tire, and Joe Kovac of Kovac Tire. This being the fifth Gold Dealer meeting, Madonna Conroy, who administers CTA’s marketing programs, took a few minutes to recognize the growth of the program by honouring the dealers – approximately 10 dealers in all – who earned spots at all five incentive trips.