AKRON- Tag. CGT's it. Continental General Tire Inc. (CGT) has inked an agreement with Tire Alliance Groupe Inc. (TAG) that will result in a ``substantial'' volume of its Conti-brand tires being distributed in 26 states by TAG members-six of North America's largest independent retail tire dealerships, with a total of 425 outlets.
Within 90 days, Charlotte, N.C.-based CGT will supply TAG members with eight proprietary Continental lines, including broad market, performance and light truck tires, on an exclusive basis.
The tires will be manufactured in CGT plants in Charlotte, Mount Vernon, Ill., and Mayfield, Ky.
Barry D. Robbins, TAG's president and CEO, called the agreement beneficial to both companies, ``because we'll help (CGT) develop the (Continental) brand's position and awareness in the U.S., yet we'll have a brand name that has some panache and is exclusive to us. We're delighted with the arrangement.''
While it will provide quite a boost for the Conti nameplate, TAG has no plans to emphasize General-brand tire lines, he added. ``(Conti) is just a better arrangement for us.''
CGT President Bernd Frangenberg described the deal as a coup-and the ``biggest sale ever''-for the Continental brand in the U.S. ``It's an intelligent way for us to put the Conti brand on the map in this country.''
Nonetheless, he anticipates some ``cannibalization'' of sales, and that ``some Conti dealers will not like (the TAG deal) too much.''
Operating from an office in Akron, TAG comprises the following dealerships, which have combined estimated annual retail sales approaching $400 million: Don Olson Tire & Auto Centers, Clearwater, Fla.; Michel Tire, Cincinnati; Parnelli Jones Inc., Dominguez Hills, Calif.; Somerset Tire Services, Bound Brook, N.J.; Tires Plus Groupe, Minneapolis; and Tire Warehouse Central Inc., Keene, N.H.
Although no specific volume numbers of Conti tires were given, Mr. Robbins said the dealerships will be provided ``substantial volume-in the seven figures.''
The former Goodyear vice president of marketing, North American Tires, also said TAG is finalizing another supply arrangement-for an exclusive line of private brand tires for its members-and expects to announce that soon, though it appears CGT will not be the manufacturer.
TAG's membership may also be growing.
Serious talks are under way with ``a couple people right now,'' Mr. Robbins reported. ``We want to maintain the same criteria we presently have. We're only signing `eagles'-people who are pretty special-and they're hard to find.''
``We want any new members to have similar characteristics to current members,'' he added, meaning TAG's membership will be limited by the following factors:
Emphasis on retailing; and
Significance in the markets of operation.
``It goes without saying, they have to be reputable people in the marketplace,'' he said.
Since its formation last summer, the alliance has concentrated most of its efforts on tire supply arrangements, Mr. Robbins said.
However, TAG is now ``also talking with people in a number of product areas other than tires, including things as diverse as equipment, batteries, oil and credit cards,'' he said. ``There's lots of activity going on.''
Mr. Frangenberg said the formation of TAG-type purchasing groups follows a trend that began in Europe some 10 years ago.
Manufacturers initially were reluctant to accept these groups, he said, but that was ``a mistake.'' He sees them as a ``legitimate, long-term, viable answer for independent dealerships to compete with the big guys'' and predicted many more such alliances in the future.
``We're excited about TAG's future,'' Mr. Robbins said. ``There's no question in my mind what we're doing is a competitive necessity-and also extremely farsighted. It will provide (members) with a competitive advantage.''