Published on April 10, 2009 @ 6:00am EST

Conti tells Gold dealers: We aim to grow, despite economy


MONTEGO BAY, Jamaica—There are two ways to look at business in this rough economy, Andreas Gerstenberger told tire dealers attending Continental Tire North America (CTNA) Inc.'s Gold Dealer meeting in Jamaica.

Either the glass is half empty or it is half full, he said. citing the oft-used cliché. Conti, for its part, is choosing to subscribe to the latter, as company executives spelled out their plans for the Gold program in 2009.

The strategy for the most part will remain unchanged from 2008, except that Conti will be very cost conscious, said Mr. Gerstenberger, CTNA's executive vice president of sales and marketing, passenger and light truck tire division.

Citing the latest Rubber Manufacturers Association (RMA) shipments statistics, he noted the replacement passenger and light truck tire markets declined 6.2 percent in 2008 and are expected to fall another 4.2 percent in 2009.

Still, the value of the replacement market is hovering around 220 million to 230 million units annually almost every year, and the forecast for annual growth (beyond 2009) through 2014 is still around 2 to 3 percent.

“So yes, we have a dip,” he said. “Yes, the dip is pretty significant. But if you look at the percentage, the market overall is relatively stable and mature.”

Still, to grow in what remains the biggest single tire market on the planet, Mr. Gerstenberger said dealers, distributors and manufacturers will have to take market share from someone. And that's just what Conti aims to do.

Mr. Gerstenberger told dealers his optimism is based, in part, on the strong growth the Gold program has experienced over the past three years.

“If you look at you, our Gold dealers, in 2006, 2007 and 2008, we had phenomenal growth not only in units but also in dollars,” he said.

Conti finished 2008 with roughly 1,750 Gold program dealers, up from about 1,000 at the beginning of the year. Already this year, the program is approaching 2,000 dealers, he said.

Sales have grown as well, climbing 184 percent from 2006 and 2008.

As for the Gold program's strategy in 2009, Mr. Gerstenberger said CNTA will continue the revitalization of its brands, focusing more on the Conti lines, after concentrating on its General brand in 2008.

The Conti brand will get three new lines under its Extreme family line—the ExtremeWinterContact, ExtremeContact DW (dry and wet) summer tire and its all-season counterpart ExtremeContact DWS (S for snow). The DW and the DWS will be launched in the marketplace May 15, according to Travis Roffler, CTNA's director of marketing.

In addition, the company will introduce a General Grabber light truck tire with outline red letter sidewall styling and will add 26 new sizes to its General Altimax Artic winter line.

This year will be the biggest launch of products “in our history in the Americas,” Mr. Gerstenberger said, with 261 new replacement sizes introduced.

Even with the tough economy, he said Conti is not cutting its investment for these product launches. “We are committed to it. We said that we are going to do it and we are continuing to do it.”

To help push sales of the company's products, CTNA officials also announced aggressive new incentives for dealers and consumers.

These include doubling the Gold Rewards for the ExtremeContact DW and DWS to $16 per tire, as well as to $8 per tire for the ContiProContact and CrossContact LX. Dealers and distributors must purchase a minimum of 225 units in the second quarter with any mix of Conti and General products.

Also for 2009, Mr. Gerstenberger said Indian Head, S.C.-based CTNA also will work to leverage its OE position with the auto manufacturers, increase its winter tire business and further focus on its online training for dealers.

“We will go into 2009 moving forward together with you and all our other customers with exactly the same mindset, not ignoring but confident that we together can take a bigger piece of that pie again like last year and the year before,” Mr. Gerstenberger said.


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