They're Jammin': Conti Puts on Optimistic Face, Aggressive Dealer Programs - Tire Review Magazine

They’re Jammin’: Conti Puts on Optimistic Face, Aggressive Dealer Programs

Conti Puts on Optimistic Face, Aggressive Dealer Programs

It’s easy to be pessimistic in these times. After all, newspapers and the nightly news report on every aspect of this global recession.

Continental Tire North America prefers to see the glass as half full, and feels quite justified in its optimistic stance. As it told some 200 dealers at its annual Gold Dealer Conference, held this week in Montego Bay, Jamaica, the company is moving full steam ahead with new products and aggressive programs to deliver more sales – and profits – to its dealers.

On tap this year is the new Continental Extreme line – Winter, DW and DWS, which has already been previewed to dealers and media – as well as a new General Grabber light truck product and a major size extension to the General Altimax Winter line. Dealers will be backed by three major consumer promotions, new POP materials and additional dealer support and training offerings.

CTNA’s aggressive approach should be no surprise; over the past four years it has ridden a highly proactive approach to produce, market and distribute to gain significant sales and channel increases. As Andreas Gerstenberger, executive vice president of sales and marketing, told Gold Program dealers in Jamaica, the company has benefited from sharp increases in sales each year since 2005.

Gertsenberger said that parent company Continental AG saw its passenger/light truck tire group post record global sales and earnings in 2008, even though writedowns associated with Continental’s acquisition of Siemens VDO last year brought an overall loss of more than $1 billion against combined sales of $31.5 billion.

Despite the current turmoil enveloping Continental AG, Gerstenberger said, “Overall, operationally this company is sound.”

As for the U.S. and Canadian market, he said, RMA forecasts through 2014 indicate a slow recovery to pre-2008 levels. “It will be a fight to get growth” in the market, but he said CTNA was confident that both it and Continental dealers will make gains in sales and share.

“Our replacement market strategy remains the same,” he said, with a focus on customers, products and brand, plus production and logistics.

On the customer front, he said, CTNA will continue to focus on channel and geographic distribution, increasing retail business, leveraging its OE presence, and improving fill rates.

Gerstenberger noted that the number of Gold level dealers rocketed 216% since 2006, with more than 2,000 dealers in the program, and that through 2008 Gold level dealers earned sales increases of 184% since 2006.

From an OE standpoint, CTNA is working to “rightsize” its domestic OE involvement, targeting a “strategic intent” of 12% share, down from nearly 20% in 2005. European fitments will drop down to 30% in 2009 from 32% last year. The focus, he said, will be on the right kinds of vehicles that will deliver the best replacement results in sales and profits.

In terms of its product and brand strategy, Gerstenberger said, the focus will stay on continuing the renewal of CTNA’s product portfolio, growing new and dedicated products, accelerating its winter tire business, and improving sell-out price management.

Since 2006, he said, CTNA has almost completely turned over its product line-up, adding 741 net new SKUs to give the company 80% line coverage in the passenger and light truck/SUV segments. Some 261 new SKUs will be added in 2009 alone, following the addition of 173 in 2008 and 204 in 2007.

The 2008 winter tire season was good to CTNA, he noted, with its winter tire sales jumping 63% in Canada and 24% in the U.S. against overall market increases of 45% in Canada and 31% in the U.S. Much of the Canadian increase can be traced back to Quebec’s mandatory winter tire law that took effect in 2008, but Gerstenberger said even then, CTNA plans for further winter tire sales increases this year.

Regarding production and logistics, Gerstenberger said CTNA will stay focused on minimizing its dependency on European supply, improve its production flexibility and product range, and continue to realign capacity. For 2008, he said, CTNA received 33% of its tire supply from Continental’s European plants. That figure will fall to 27% this year, he said, as more product is shifted to CTNA’s facilities in the U.S., Mexico and Brazil. Winter tire production has even started at CTNA’s plant in Mt. Vernon, Ill., he noted.

All of these moves, he said, “are why, even with the news we hear every day, we believe the glass is half full.

“We intend to stay very focused on being confident in what we do with you,” he told the Gold dealers.

Dealer support programs were much of the focus of the Gold Dealer event, and Jim Sickling, director of the independent dealer channel for CTNA, outlined the company’s 2009 plans.

With the advice of the Gold Dealer Council, CTNA is tying program award levels closer to product prices, having its area dealer managers spend more time on product training for dealers, and creating the position of regional sales coordinators to help dealers with POS and promotion programs.

In addition, Sickling unveiled significant additions to CTNA’s dealer training efforts, including greater emphasis on helping dealers and their staffs develop a more consultative sales approach. Part of that training effort will center on better arming dealers with strategic data about their markets, customers and competitors. Bill Jarvis, owner of Midwest Tire & Service in Schereville, Ind., explained to his fellow Gold Dealers how the new program helped him better understand his market, how his competition worked, and how his pricing stacked up.

Jarvis admitted that he found some key holes in his product screen and some of his tires were sorely underpriced, points he said the program helped him uncover. “You need every bit of information you can get your hands on, Jarvis told dealers. “I was leaving money on the table, and you don’t want to do that in today’s market.”

On the new product front, Joe Maher, head of product planning for CTNA, said the company’s goal is to “create a product portfolio that is easy for dealers to sell.”

The new Continental Extreme line, with the Extreme Winter, Extreme DW and Extreme DWS, rolls out this quarter, Maher said, after dealer and media introduction programs earlier this year in Big Sky, Mont., (see Tire Review, March 2009) for the winter tire line, and most recently at Auto Club Speedway in Fontana, Calif., where some 120 members of the media spent the day putting the tires through seven different driving events, including a wet autocross course, a wet skid pad, a “time attack” style road course, a dry handling course, on city streets, a braking test and on a high speed oval at the track.

In the third quarter of 2009, the General Grabber Extreme Traction, complete with red sidewall lettering, will be launched, Maher said. Based on the General Grabber off-road race tire, the new Grabber features a three-ply casing and an aggressive traction tread design that has been tempered for reduced road noise. The line will include 14 initial sizes – LT-metric and flotation – over 15- to 22-inch wheel diameters.

2009 will also see the addition of 26 new sizes to the General Altimax Arctic line – for a total of 52 sizes in the line – giving it 80% market coverage in Canada and the U.S., he said.

Marketing director Travis Roffler closed out the Gold Dealer meeting with a run down on CTNA’s brand and product advertising and promotion support plans.

“We realize that without a quality product and awesome support we couldn’t succeed in this market,” he said. “We want to continue to do those things that add value to you and your customers.”

Roffler said CTNA’s Continental brand consumer ad campaign will continue its “Confidence” theme, interchanging tire lines and targeted vehicles based on specific products they want to promote. Its trade magazine campaign will continue its focus on the Gold program and special promotions, such as the recently ended $75 gift card push to support Conti lines.

Roffler noted that the early first quarter gift card program was a success, and was intentionally run early in the year “because we realized this was going to be a tough quarter and we wanted to kick start business for dealers.”

Looking forward, upcoming promotions will tie in with the Universal Pictures release of the latest “Fast & Furious” movie, which features General brand tires. That program will feature a $50 gift card for consumer buyers, as well as a studio-supported national sweepstakes for a Subaru Impreza WRX sti and Gibson guitars. That promotion will run from Mar. 30 through May 25.

From June 1 through July 31, CTNA will give tire buyers a new GPS navigation system, a repeat of what Roffler said was a highly successful effort in 2008.

In addition, there will be dealer and consumer incentives tied to the launch of the Continental Extreme line. In all, Roffler said, CTNA will have 22 weeks of special promotions in 2009.

With the promotions and launches will come new POP materials, including an all-new tire display with a smaller footprint (based on dealer comments) that dealers can easily interchange graphics for different tire lines.

Roffler also outlined motorsport and special event tie-ins that dealers could also participate in within their local markets.

While the weather was surely bright along the Jamaican beach resort, after all CTNA execs had to say, Conti Gold dealer moods were also bright.

As Roffler summed up, “Obviously, the market has endured a lot of downside. We wanted to come back with an enthusiastic strategy.”

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