ABOARD THE LIBERTY OF THE SEAS—Continental Tire the Americas L.L.C. is renewing its vow to serve its dealers' needs better—including improving fill rates—as the company “turns the corner” in 2015.
“Last year we talked a lot about turning the corner,” Bill Caldwell, vice president, sales and marketing in the U.S., told a record gathering of the firm's elite “Gold” dealers on their annual spring incentive trip.
“We were talking more about our readiness on the Continental side to deliver what we thought was everything that you needed to make us a reliable manufacturer,” he said, “a reliable brand for you to carry in your stores.”
This year's incentive trip, a four-day Caribbean cruise, attracted a record number of Conti's elite “Gold” dealers, 304 in all, including 31 first time elite status dealers.
“We felt very confident going into 2014 about our ability to supply your needs,” Mr. Caldwell added, addressing the fill-rate issue, which has been a weakness for Conti in the past. “And we also talked about you being our No. 1 priority, but also, we wanted to be your No. 1 supplier program.”
During the event, Conti announced its next dealer meeting will be at the Hard Rock Hotel in Cancun, Mexico, April 11-15, 2016.
“We are excited about what's to come in 2015,” Mr. Caldwell said.
At year-end 2014 Conti sent out a dealer survey to garner feedback and learned that while 60 percent said Continental is already their No. 1 pick, others offered suggestions for improvement.
“What you told us was you need a competitive program to help your profitability. I think that's core to business every day,” Mr. Caldwell said.
Chris Jenkins, national programs manager, spoke about the success of the Continental Gold program last year, which saw significant increases in purchases and rewards.
“If the success of the Gold program in 2014 is any indication of your overall business, then congratulations to all of you because it was a terrific year in 2014 for the Gold program, which I think is a reflection of your overall business,” Mr. Jenkins told the group.
Highlights of increases for the Gold program include:
c Gold purchases up 18 percent;
c Gold rewards up 33 percent;
c Elite dealer purchases up 20 percent; and
c Elite dealer rewards up 26 percent.
As part of program enhancements, Conti launched the Continental Automotive Credit Card on April 1.
“You can compare this automotive card to others in the industry and you'll find that this is by far the best card out there right now, and we're very proud of that,” Mr. Jenkins said.
The card is targeted at helping dealers with their average ticket sales and bringing back loyal customers for repeat business.
“As you sign up and as you get more people and add them on to your program, your name will be embossed in the bottom left-hand corner (of the card),” he said.
Other features of the card include low processing fees, promotions, no monthly fees (but usage/transactions fees still apply) and application processing for the business. Customer benefits include: special financing available for six or 12 months, monthly payments, and the card is accepted at all U.S. Exxon and Mobil gas stations.
Mr. Caldwell said the tire maker was not shocked by its dealers' requesting more supply.
“This wasn't a surprise for us based on the two or three years of history that we had with an inability to fill orders in a level of frequency that you needed,” he told dealers.
This was an area in which Conti knew it needed to improve, and Mr. Caldwell said the company is working to improve its manufacturing capacity, including the opening last year of its Sumter, S.C., passenger and light truck tire plant. It produced nearly 1 million tires in 2014—its first full year in production—and Conti is aiming to double that to 2 million in 2015.
“This has helped in many ways to improve our supply into the market, but it's not the only investment we've made. We've made investments in our global manufacturing...that has really freed up the constraints we were living with in the past,” Mr. Caldwell said.
“We also know that you can't be good at supplying if you don't plan correctly.”
Besides manufacturing, Conti said it also has invested in its forecasting and planning groups, allowing it to be more collaborative with distributors supplying product to dealers on a daily basis. This strategy allows the company to plan more effectively what dealers' needs are and make sure it has the right tires in the right place at the right time for its customers.
“It might sound like a lot of theory and a lot of paperwork,” Mr. Caldwell continued, but what Conti found by investing in this process with distributors and meeting with them on a monthly basis is “we see significant improvements.”
He said Conti's distributors told the company an 80- to 85-percent fill rate is a best-of-class performance rate. At year-end 2013, the tire maker was between 50 and 60 percent. By the first half of 2014 it claimed to have pushed that up to 70 percent, including hitting 80 percent in the second half.
“Hopefully you see that when you're ordering tires from your distributor that more than likely they have them in stock, and more than likely you're about to cash in that sale,” Mr. Caldwell said.
Besides increasing its supply capacity, Conti also has focused on expanding its field sales team.
“Traditionally we've come to market with four regional managers and 24 area dealer managers around the country to service all of our dealer channel customers,” said Sean McDermaid, Conti's national sales manager.
That simply was not enough, he added.
“We started a new initiative to add a new, better trained field sales force dedicated just to you, our Gold dealers,” Mr. McDermaid told the attendees.
There are now 12 regional Gold coordinators in place in the field, with more to be added this year.
According to survey results, Mr. Caldwell said dealers are interested in Conti having more OE fitments on domestic cars. While Continental maintains a consistent OE position on one in every three cars in Europe, its position in North America is a stable one out of six.
“What's really changed in where we've been able to present our technologies to the original equipment manufacturers in a better way is that we're more and more fitted on higher-end fitments...,” he said, including luxury vehicles.
This should help dealers in the long run, Mr. Caldwell said, as those vehicles come into service bays for tire replacement.
“We're really a large original equipment supplier in many areas beyond tires,” he added.
In 2013, Conti was the top automotive supplier worldwide—in terms of sales of components to the original equipment manufacturers.
“What it means is that, that business is really part of our DNA,” Mr. Caldwell said. “We invest a lot to have partnerships with the original equipment manufacturers and in exchange, we secure a lot of business with them.”
Although he did not have the 2014 numbers yet, Mr. Caldwell said he would assume Conti will always be among the top three suppliers in this area going forward.
To reach this reporter: [email protected]; 330-865-6143; Twitter: @jenniferkarpus