10/14/2008 Technological expertise and focus on safety are key factors of success for market leader Continental

Hanover/ Jeversen, October 13, 2008. Despite extremely difficult market conditions at present, Continental AG is continuing its successful strategy of recent years in the European aftermarket business for passenger and light truck tyres.

Boasting a current market share in the original equipment business of more than 30 percent, Continental has been catering for the needs of vehicle manufacturers better than all other premium tyre manufacturers since 2003. This includes the company’s focus on reducing rolling resistance while still retaining or even enhancing the tyres’ safety characteristics. One of Continental’s key strategic advantages is the technological expertise available within the corporation as a whole – something no other tyre manufacturer can equal. This expertise includes brakes, sensors, as well as combinations of the two technologies, for example in the creation of the intelligent tyre/wheel system. What’s more, Continental employs its multi-brand portfolio very successfully by flexibly offering trade partners regionally different brand and product combinations to meet their requirements. Regions of growth for winter tyres will remain unchanged over the next few years, these being eastern Europe and Russia in particular. In the summer tyre segment, the company intends to expand its market position in southern Europe in addition. One big threat to the European tyre aftermarket business is the high number of cheap tyre imports with marked safety deficiencies – on wet roads, for instance – which are now flooding the European market.

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At the end of 2007 Continental AG secured leadership of the whole European market (original equipment + aftermarket) for passenger and light truck tyres. This success was attributable to a very high market share of over 30 per cent in the original equipment segment, and more importantly, to consistent technological advancements with maximum priority on tyre safety features.

“Our portfolio of brands is distinguished by a clear positioning of the individual brands as well as a highly flexible combination of individual brands, and hence also of the individual product lines", explains Nikolai Setzer who is in charge of the aftermarket business for passenger and light truck tyres in Europe and Africa. “Our main brand, Continental, stands for well-balanced features of the highest standard with particularly good safety reserves, while Barum, the budget brand, is designed to deliver high cost efficiency. Depending on market requirements and the needs of the dealers, we use the Uniroyal rain tyre brand in western Europe as well as the Semperit brand for the Alpine regions, whereas in northern Europe and Russia we use the strong Nordic region brands Gislaved and Viking, and in eastern Europe the Slovakian brand Matador.” No other tyre manufacturer has such a wide ranging brand portfolio as Continental.

Clear commitment to the goals of the 2010 European Road Safety Charter.

The EU wants to reduce the number of traffic fatalities within the 27 member states to 25,000 by 2010. However, this ambitious goal can only be achieved if the average number of traffic fatalities per million inhabitants is 50 for all member states. Although the figure has improved during the past few years from 114 in 2000 to a current 87 on average, this is still far from being sufficient. “We want to make an appreciable contribution to more safety on Europe’s roads. Not only ultra-safe tyres, but also tyre pressure monitoring systems and driver assistance systems like Electronic Stability Control (ESC) and Lane Departure Warning (LDW) are ideal safety enhancers in our view", adds Setzer. Continental is one of the world's leading suppliers in these product segments as well.

Planned EU tyre labelling can improve safety if organised in a meaningful way.

The EU Commission will submit to the European Parliament, probably before the end of this year, a draft proposal for a tyre label providing information about the two criteria of rolling resistance and wet grip. “If this label is supposed to aid decision making among tyre buyers, then it must also adopt an equal weighting of these two performance characteristics. A one-sided weighting or more differentiated grading of rolling resistance categories would, on the contrary, serve only to promote cheap tyre imports. Major safety deficiencies have been identified for these cheap products, especially for wet grip performance. The deficiencies are well known and are reaffirmed during every tyre test conducted by leading test magazines", Setzer cautions. Continental therefore suggests using a label with four categories for each performance characteristic. Also, there are still numerous questions regarding actual implementation of the labelling scheme which will have to be clarified and incorporated into each EU member's national law. “Sticking a label like that onto every single tyre, in our view, just means added work and expense that brings no benefits, because only seldom does the tyre buyer who goes to a tyre dealer get to see the tyres anyway prior to their assembly. Displaying suitable information in the salesroom would have a much bigger chance of succeeding", explains Setzer.

Trends in European market segments since 2000 give cause for concern.

Safety awareness among motorists in Europe as a whole appears to have declined during recent years. “While the premium winter tyre segment recorded a 2.2 per cent drop to 38.6 per cent between 2000 and 2007, our budget segment has grown 26.4 per cent to 30.0 per cent. So our goal is to strengthen the premium segment again and to expand it accordingly in the interest of the European Road Safety Charter. In Switzerland, for example, the high share of premium segment tyres, at 48 per cent, is reflected in a very low number of traffic fatalities per annum (49), mirroring the fact that drivers there are exceedingly safety conscious,“ says Setzer.

The tyre divisions are an official sponsor of the FIFA World Cup 2010™ in South Africa. For further details, please go to www.ContiSoccerWorld.de.