FORT MILL, S.C.—Continental Tire the Americas L.L.C. expects the tire industry, overall, to stay fairly consistent throughout 2015, with no major ups and downs.
One change the industry has faced this year is the imposition of import duties on Chinese consumer tires, a Continental spokesperson told Tire Business, but the effect of them on the overall market—and Conti specifically—is still too early to assess.
“Many customers are still carrying inventory of those products, from buying ahead of tariffs, so we don't see direct effects yet,” the spokesperson said. “Once the final ruling is announced and inventories run out, we will be better able to assess the impact.”
The Fort Mill-based tire maker does not expect to have to make any major adjustments to its plans as it gears up for the second half of the year. “We are able to deliver on our planned growth objectives so far this year,” the spokesperson said.
According to Continental A.G.'s first-quarter earnings report, demand for replacement passenger car and light truck tires in the NAFTA region fell in the reporting period as expected—owing to price increases as a result of imposed import duties for tire imports from China. Budget tires were particularly affected.
Preliminary figures show that volumes of replacement passenger and light truck tires declined year-on-year by 6 percent in the first quarter of 2015. For the remainder of the year, Conti said it anticipates growing demand for replacement car and light truck tires in light of the recent considerable rise in the number of miles driven.
“However, for the year as a whole, we have lowered our forecast from 1 percent to negative 2 percent. The expected decrease in the forecast can be attributed solely to the significant decline in imports.”
Conti said it expects winter tire demand this coming season to “be on par with” the last year, which showed strong sales.
Meanwhile, in the commercial vehicle replacement tires segment, the company stated in its first-quarter report that, according to preliminary data in the NAFTA region, demand was up by 3 percent in the first quarter of 2015. For the year as a whole, it said “we still anticipate growth of 3 percent in line with the economic growth of the region.”
Earlier this year, Conti executives gathered for the annual elite 'Gold” dealer meeting to discuss the manufacturer's goals for the year.
“Last year we talked a lot about turning the corner,” Bill Caldwell, vice president, sales and marketing in the U.S., told the attendees.
“We were talking more about our readiness on the Continental (brand) side to deliver what we thought was everything that you needed to make us a reliable manufacturer—a reliable brand for you to carry in your stores,” he said.
And, Mr. Caldwell continued, 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, he said, and the company is working to improve its fill rates through enhanced manufacturing capacity, including the opening last year of its Sumter, S.C., passenger and light truck tire plant.
That factory produced nearly 1 million tires in 2014—its first full year in production—and Conti is aiming to double that 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 have really freed up the constraints we were living with in the past,” Mr. Caldwell said.
In a recent report, Consumer Reports (CR) magazine ranked Continental as the No. 2 tire brand, noting, “Continental consistently offers high-scoring tires. Handling and impressive stopping grip on dry and wet roads are typical of this brand. As a bonus, they are attractively priced.”
Top models, according to CR, include the discontinued all-season Continental ProContact EcoPlus; performance all-season Continental PureContact; ultra-high-performance Continental ExtremeContact DW(summer); winter Continental ExtremeWinterContact (truck); and Continental Cross-Contact LX20 EcoPlus (all-season truck).
Additionally, Continental has been busy this year celebrating the 100th anniversary of its General tire brand as it continues to roll out events and promotions to mark the occasion.
To reach this reporter: jkarpus@ crain.com; 330-865-6143. Twitter: @jenniferkarpus