Continental Execs Discuss Brands, Supply, More

March 23, 2023

During Continental Tire the Americas LLC’s recent Gold Dealer meeting, Bill Caldwell, senior vice president, U.S. PLT sales and marketing for Continental; Chris Charity, vice president of sales, U.S. PLT replacement business; and Travis Roffler, the company’s director of marketing, sat down with MTD to discuss a variety of topics.

The first subject? Where Continental Tire the Americas LLC fits within parent company Continental AG’s ecosystem.

MTD: Where does Continental Tire the Americas fit into Continental AG's overall world?

Caldwell: We are a big, mature market leader in Europe, so we have a strong position there. I’d say the Americas market and the Asia/Pacific market is where the company sees an opportunity to grow. Our marching target is to grow the business in those two regions.

MTD: Specific to the U.S. market, are you not considered mature?

Caldwell: It is a mature market in which we want to increase our market share.

MTD: Does that mean you’ll stay with just the two brands, Continental and General, or will you bring out a third brand?

Caldwell: There is not a (plan) today for an additional brand. That’s not a permanent position, but right now we’re focused on the two brands and hope to grow them within the two top tiers.

MTD: Are you planning to make any substantial investments at your U.S.-based plants in 2023 or beyond? (Editor’s note: Continental has three plants in the U.S. - one in Sumter, S.C.; one in Mount Vernon, Ill.; and a commercial truck tire plant in Clinton, Miss., that opened in 2020.)

Caldwell: We are making ongoing investments in our manufacturing network, including our plants in the U.S. Most of our investments are in improving capacity for larger tires. The increase in rim diameter has been a pretty aggressive trend in the last three years, in particular, and we are spending money adding capacity and changing out equipment to keep up with that trend.

MTD: How has the war in Ukraine impacted your supply situation?

Caldwell: Other than being a huge distraction of resources, the company has done a great job of managing (its) resources. From a selfish aspect, we haven’t experienced an impact within our market. Kudos to the (Continental) team by moving tire production to different locations.

MTD: That leads to the next question. Last year, there were supply issues and this was a major discussion with dealers. How has (the supply situation) changed?

Caldwell: Around last August, we were just turning the corner and our approach of getting more product from Europe and available capacity from there. Those plans have come to fruition and clearly the last half of last year saw a significant improvement from a supply standpoint.

Domestically, this size thing has hit the plants hard in terms of having the right configuration in the plants and that will continue to be a work in progress. I also think the market has slowed down a bit from the demand of the last couple of years. Things are coming into balance. We still have things to work on, but it is not the micro-topic like it was last year.

MTD: Are your U.S. plants at capacity?

Caldwell: They are building every tire that they can. I think there is an employment challenge that every company is going through and (with) the turnover in the workforce, I believe there is still more work that can be done to be more productive.

MTD: You’re a major player in the U.S. market. From your point of view, how has M&A activity in the distribution channel affected the market?

Charity: In the last three to five years, it’s been about choosing the right business partners from both sides of the table. It’s about finding the right ways to support each other. That’s the biggest thing we’re trying to spend our time on, which is finding the right partners and growing with them.

Outside of that, we can’t (anticipate) what is going to happen, as these things happen. We have to hold discussions and figure out how to change and adapt to the situation at hand.

Caldwell: Adding to what Chris said, customers need to value what we bring to the table. If we get that right, we hope to be rewarded for that. Any changes to the customer base, which is happening in this market, make things more challenging.

Like Chris said, we don’t get to set the playing field. We just operate within it. So we need to focus on what we can control, which is that value proposition to make sure we are attractive to the dealer or distributor and ultimately the consumer, so that they want to do business with us.

MTD: Here’s another high-level question. As a leading company, what message can you share with dealers and distributors about inflation, interest rates and the overall economy?

Caldwell: We see the same things that you do. Customers are talking about tight budgets and they are drifting down to lower tiers due to this. You can see that we are focused more on our General tire brand today.

We must have a compelling offer in both tier-one and tier-two lines. We talked about our credit card (during the Gold Dealer meeting.) There is a trend where people might need this - to have access (to credit) to put tires on their car. We want to make sure that can happen.

MTD: Have you heard more concerns from dealers about their stability?

Charity: I would not say that dealers are concerned about their stability, but everyone has recognized that there has been consolidation in the past couple of years. So depending on the dealer, where it makes sense and where they are going in the next couple of years, I’m sure there are offers on the table … (and) they’ll make a decision. We’ll continue to support our partners with our programs to help them grow.

Caldwell: The good thing about the tire business, particularly the replacement side of it, is that it is less volatile in recessionary times than other segments. There are headwinds, but the segment that we’re in is somewhat robust.

MTD: What are your near-term goals for the Gold program?

Charity: To increase the size and scope. The way we set our goals is to find the right partners. What we don’t do is set target numbers. It’s much more about quality and if we find the right dealer, we’ll bring them on the program and help them be successful.

MTD: Where would you like to see it in five years?

Charity: We still have opportunities to grow in this segment. We want to have consistency in the program. But consistency does not mean (becoming) stagnant. We want to make sure we find new programs. We need to offer more things, so we can be a better partner.

MTD: You have a heavy reliance on American Tire Distributors Inc. (ATD) for distribution. How do you grade that and the service they provide to your customers?

Caldwell: They are one of many customers that we have. I don’t think we have an over-reliance on ATD, if that’s what you’re implying. We have a number of customers who are strategic partners of ours.

MTD: You mentioned that you’ve made it a priority to increase your digital position. Can you explain this further?

Roffler: We continue to work on our website and make downloads more readily available for our dealers. There’s been a gigantic shift in consumer media, particularly within the digital market. What you’ve seen is a major shift.

If you look at Major League Soccer, not only are they now on the Fox network, but with their Apple TV deal, you can now watch every single game. (Editor’s note: Continental has a long-standing partnership with Major League Soccer.) So you have the commercials on Fox and a different set for Apple broadcast. You have connected, streaming and linear - all delivering to different consumers with different costs and programs.

MTD: Is your sponsorship of Elite Club Soccer new for this year?

Roffler: Yes. There are 3,500 clubs at the national level. There are 38 national games and 19 championship games. It is a grass roots youth soccer program, with moms and dads driving hundreds of thousands of miles every year, taking their kids around to compete at the national level. The exposure to them and their kids is a good fit for Continental.

MTD: What is the one thing you want the Gold Dealers to take away from the meeting?

Charity: It starts with consistency. We want to listen to the dealers and then bring solutions for their challenges. That is part of every conversation and discussion we have with the dealers.

Click here to read MTD's recent report from the 2023 Continental Gold Dealer meeting.

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