Continental Tire discusses how prioritizing dealer feedback maximizes profits

Continental Tire discusses how prioritizing dealer feedback maximizes profits

Continental Tire executives talk about the status of the PLT tire market, the company's strategic balance between OE and replacement tire offerings, and more.

If you could boil this year’s Continental Tire GOLD member meeting into one takeaway, it’s that the tire manufacturer is putting a whole lot of effort into listening and responding to its dealer base. Continental doesn’t own company stores, so building a strong value proposition around the company’s brands and products with its distributors and retailers is the most effective path to success. To maximize the mutual benefits of this partnership, Continental leadership says acting on the will of its dealer base – whether that’s about product, programs, distribution, or anything else – is paramount.

In this exclusive Q&A session with Tire Review, Continental Tire executives Chris Charity, vice president of sales, and Travis Roffler, director of marketing, discuss the status of the PLT tire market, the company’s strategic balance between OE and replacement tire offerings, the advantages to the company’s approach to EV tires, and more.

Tire Review: What trends have you seen in terms of PLT tire demand in Q1, and what are your expectations for the balance of the year?

Chris Charity, vice president of sales: When we plan for the year we’re always looking ahead, and the U.S. market is a big, mature market, so we’re always planning for somewhere around 1% [growth]. You’ll have years that are bigger and years that are smaller, but if you go back over the last 10-12 years when you look at the averages, it lands somewhere around 1%.

Tire Review: Since Continental doesn’t have company-owned stores, are there challenges associated with keeping your tire dealer base engaged?

Charity: Our strategy really hasn’t changed over the last 5-10 years. It’s built around partnerships. It’s around people, and that’s both customers and our internal team investing and doing the right things. It’s creating a value proposition and having really strong products.

I think making sure that we have to go and earn that business every single day helps us keep the edge a little bit. We need to make sure that if we’re getting feedback, we take that, internalize it, and understand what we want to do – whether that’s change, modify, adapt, or continue to do the right thing.

Tire Review: What kind of output are you seeing from your U.S. plants at this point? Are you back to pre-pandemic levels?

Charity: There are a few different ways to answer this question.

Probably the biggest change that we’ve seen most recently is more stabilization from a workforce standpoint. Going through the pandemic, that was a big thing. We had more and more new people coming into the plants, and we had to do a lot of training to keep up with consistency.

Then there’s the overall tire mix, which has changed over the last 4-5 years. We’ve shifted to bigger and bigger tires, such as 19 in. and above. The amount of rubber that we’re processing through the plants is moving back in that direction. This mix change we’ve seen in the plants over the last couple of years means we’ve had to invest – and that’s not a one-day-to-the-next investment. Now, this year, we’re seeing some of those investments come to fruition, which will help. We’ll also continue to lean on some of our plants from Europe for some more support where it makes sense.

Tire Review: How are you approaching your OE vs. replacement tire business in 2024?

Travis Roffler, director of marketing: If you look at the consumer data research, mileage, traction, noise – those attributes that are important to consumers – are not going to be the same for the OEs. So, we’ve leveled the playing field. On the GOLD Program, we used to offer higher payouts for the replacement products over top of the OE products. We’ve now balanced that.

In other words, if a consumer comes in and has ProContact RX tires on the vehicle, there’s no penalty to the GOLD Dealer to just put the RX back on it where it used to be. We were, in essence, somewhat pushing our dealers to not sell the OE tire, and sell the replacement tire line instead. Now, we have balanced that by offering the same dollars on OE and replacement lines.

Charity: Our folks in [our automotive headquarters in Auburn Hills, Detroit] continue to go after fitments and grow that side of the business, and we’re going to continue to bring a really strong value proposition around the replacement side. We will offer both as we go to market and work with dealers and make the adjustments in the program so that it makes sense from a dealer perspective, and whether it’s an OE product or replacement product they can go to market.

Roffler: The Grabber A/T Sport and A/T Sport-W are two examples where our OE team needed a product. The A/TX doesn’t fit the requirements for an OE fitment bid. That’s when we got together and said, well, we can make an all-terrain tire that’s a little less aggressive that fits the bill. We ended up creating two products because some OEs were okay with the Sport, but others wanted the W-version as they wanted a more aggressive winter package. It’s a give-and-take with all manufacturers.

It’s also an opportunity for dealers. With an OE fitment, there’s nothing easier than a happy customer who wants to go with the same tires. It’s an easy, given sale.

Tire Review: Some of your competitors approach EV tires differently than Continental, choosing to develop a separate tire line specifically for EVs. What are the advantages from a sales and marketing perspective of your strategy promoting that all of your tires are already “EV Ready”?

Roffler: We have heard resoundingly from our dealers that they do not want an EV tire. We listen to their input, and in this particular case, they were very clear on not needing another line to carry and drive up inventory costs.

As long as a tire carries the speed rating and the load index for the vehicle, there’s nothing special that we need to do. We know our compounds and construction are already optimized for fuel economy or range as well. Rolling resistance still affects ICEs the same way it affects an electric-powered vehicle. Car manufacturers are no easier on us when it comes to rolling resistance for an ICE than they are for an EV.

It’s a gigantic win for a distributor and a huge win for a retailer. I’ve got fewer lines to sell. I think other manufacturers may think there’s some advantage to trying to develop an EV tire, but we disagree. 

Charity: At the end of the day, it goes back to the previous question. We want to be present where the vehicles are. No matter if the new OE vehicle fitments are ICE or EV, we’re going to work with those manufacturers. We’re OE on seven out of the top 10 EV vehicles. We’re going to keep going after those top fitments. Our OE team does a great job with that.

Tire Review: How does your new American headquarters in Fort Mill align with your long-term growth objectives in the U.S.?

Charity: Obviously, the U.S. is a large market globally, so for Continental, the U.S. market will always be important. It’s also a growth opportunity because we’re traditionally a European company. When we take a look at the share that we have in Europe, it’s a stronger share.

I think that just being in Fort Mill itself is not that different because we’ve been down in that area for a long time, but what is different is that now we have built a strong message to employees that we’re going to be there for a long time. As we continue to grow, this allows us to bring everybody back onto one campus, which is really important for us. We want to be all back in one place and be able to have more collaboration and work together.

Tire Review: Continental has made several high-technology announcements this year for aiding in monitoring tire health. How do you balance your R&D efforts between improving traditional tire attributes and new technology, like digital dashboards and sensor technology?

Charity: A lot of the announcements you’re referring to are coming from our commercial division, but when we take a look at some of the innovations that we’re working on for the PLT side, it’s just about continuing to make sure that we’re analyzing and synthesizing data, making sure that we’re moving in the right direction and continuing to work on bringing value-added options for our customers. That might mean working with some of our strategic partners on the dealer business suite or continuing to evolve things on the product side and making sure that we’re adding to that value proposition every year.

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