A Hippe Q & A: ‘We have to benefit more’
Continental Tire North America Inc. (CTNA) has a strong original equipment consumer tire presence in the United States. Its corresponding replacement market share, however, is less today than it was in 2000.
The OE/replacement tire mix, in terms of units shipped, is 48% to 52%, according to Modern Tire Dealer’s 2006 Facts Issue. Five years ago, it was 41% to 59%.
MTD recently sat down with CEO and President Dr. Alan Hippe to discuss the company’s domestic strategies.
MTD:Continental has a strong OE presence with Ford Motor Co. in the U.S. What are the ramifications to your company of the announced plant closings by Ford?
Hippe: Well, the point for us is not reduce the volume. I would say the effects on us are not defined yet. We are looking at this, but so far, I think it looks stable. We will see how Ford executes these actions.
MTD: Is Continental looking at consolidating its PLT (Passenger and Light Truck) and OE divisions in the U.S.? There have been reports that there is extra office space in Detroit, where Conti Teves is headquartered.
Hippe: We have more OE exposure in Detroit because we have a team over there -- a large team. So I think it makes a lot of sense for us to also have an OE team for tires in Detroit. We have another team focused on replacement tires.
MTD: Earlier, we talked briefly about your marketing strategy and the importance of the replacement market in converting these OE customers. I would imagine that would be part of your domestic strategy.
Hippe: No question, we have to work on the link between… the OE position that we have and the activities in replacement. We have to benefit more. We have to look at how the market develops at a very early stage. That comes from automotive systems, and that gives us a perfect overview as to what is coming to the market.
And we can be more proactive than we have been in the past taking advantage of this information, especially if it means better development of a tire and having product available earlier available. Having the right product at the right time should definitely be an advantage.
MTD: What is the main message Continental would like to get across to independent tire dealers in the U.S.?
Hippe: Well, the first point is we are committed to the U.S. market. We think there is a major opportunity for us here. And it is very important for us to focus on the right products and on the right markets.
From a financial point of view, Continental Tire North America has not been very successful. So the way out of this is to focus on the areas where Continental is already strong. High performance tires are a major focus for us. So are winter tires. And so are OE tires because we have 20% of the OE market.
MTD: You became CEO and president of CTNA in May of 2005. How much longer will you hold this position along with your other responsibilities as finance director for Continental AG?
Hippe: That is a very good question. And it is very hard to define, so I don’t know, honestly. My task really is to take this operation and this organization in the right direction and sustain it.
Achieving better financial results -- certainly that’s the main focus, and that’s what we are aiming at. But my belief is there are great opportunities in the market, and we have to improve the operations and we have to improve the service.
I think we have a good team and we will make this team even better in the future. And I think when this is achieved, I will go back to do my original work.