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Continental to Relaunch ContiNetwork

When Tyres & Accessories recently attended Continental’s annual media briefing, we expected to hear details of the previous year’s market statistics and product trends.

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However, T&A got more than we bargained for when Continental UK commercial tyre business director, Arthur Gregg, revealed that the company is relaunching its ContiNetwork commercial vehicle retail business in February and will spend the next few years completely refreshing its product line-up.

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Full details will be published when the official relaunch takes place in February, but here is a rough outline: Continental is aiming to give its dealers a more equitable system, whereby each company will have increased freedom to choose how much fleet business they commit to. Executives recognize that large amounts of fleet business suits some dealers better than others. In addition, Continental will unveil a new “dealer charter” (not a contract), which aims to improve two-way communications. In a related move, T&A learned that a new fleet manager for the Northern region will join the company this month.

On the product side of things, Continental announced that the company would refresh the cast majority of its CV product portfolio in the next four years. And in time for 2008 the company announced that it is releasing two new ContiRe products: the 315/80R22.5 regional drive and the 295/80R22.5 construction drive.

For T&A, the main point of the briefing was to hear Continental’s perspective on the development of the market in recent years. The truck and bus tyre market continues to be dominated by regional and long haul application products, with these occupying 89% of the U.K. market and 94% in Ireland. Currently, construction-oriented products account for 6% of U.K. market sales, but Continental predicts that this figure is set to grow in the years to come as London and the nation gear up for the construction work needed to prepare the capital for the 2012 Olympics. Sales of winter tyres are also said to be on the up and are expected to grow in the future.

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The 295/80 R22.5 regional steer was the most popular size in 2006, accounting for 32% of the market. Looking at the top five sizes, it is clear that these remain central to the market as the same sizes have made up the top five for the last five years, accounting for 57% of the market in 2006. 80 series profiles accounted for 37% during the same period. 22.5-inch rim diameters accounted for 72% of the market, with growth reported in 17.5-inch sales and sales of 19.5-inch diameter products appearing to level off.

Looking forward, Continental pointed to recent debates over the possible increase of gross vehicle weight allowances and the resultant introduction of longer, heavier vehicles. The government is already reportedly sponsoring a trial with Focus. If this was to take off, Dutch research shows that CO2 emissions could be reduced by between 3.5% and 5%. For the tyre industry this would result in an increase in demand for low profile tyre sizes. Continental analysts also observed the continued demise of 10R and 11R sizes.

Broken down by axle position the market statistics show that 58% of tyres are steer fitments, 27% trailer tyre and 15% drive axle tyres. Looking back five years, this split has remained relatively static.

In 2006, the U.K. commercial vehicle replacement tyre market represented some 1.1 million units. While this figure is broadly in-line with recent years, according to Continental, this total is down 3.7% compared to the company’s 2005 figure. This concurs with the data T&A saw during the production of last year’s Truck Tyre feature (see T&A August 2007). Initial reports regarding 2007’s statistics suggest that the 2007 full-year figure will show “no signs of deterioration” and is actually more likely to be slightly up. At this point it is important to point out that Continental’s figures are based on the ERMC Europool statistics and don’t appear to include figures generated by grey/parallel imports and, crucially, far-eastern imports.

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These differences in opinion of how to calculate tyre market sales could account for some discrepancies when it comes to calculating market shares. At the end of 2007, some sources suggested that Continental’s market share had slipped to below 10%. Company representatives countered these claims, and said those estimates were off by as much as a third. Executives suggested to Tyres & Accessories that a figure of 13% represented a much more realistic estimate.

After the initial media briefing, Continental executives explained that they estimate 100,000 units to be a representative figure for the number of parallel/grey imports. With reference to Chinese imports, Continental estimates a similar number for this sector. However, a competing manufacturer told T&A that as many as 225,000 Chinese truck tyres were imported into the U.K. market during 2006, meaning that the total far eastern import share could represent as much as 16% of the market. And there are said to be signs that this figure could grow further still.

Truck tyre sales in the Republic of Ireland during the same period amounted to 122,013 units, based on the Europool calculation. By the end of October 2007 this figure was up 10.5% year-on-year. (Tyres & Accessories/Staffordshire, U.K.)

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