Mt. Vernon, IL (January 12, 2006) - As part of its plan to become globally cost competitive and maintain manufacturing operations in North America, Continental Tire North America, Inc. (CTNA) today announced a major initiative to ensure long-term viability for its Mt. Vernon tire-manufacturing facility. The program will improve efficiency and increase productivity through a combination of capital improvements and the restructuring of tire operations to bring overall manufacturing costs in line with global competition.

"Today we are announcing a plan to ensure our future success in Mt. Vernon. In addition to restructuring tire operations, we are making a major capital investment to modernize the Mt. Vernon plant and make it a state-of-the-art facility. No other CTNA plant in the nation has received a capital investment on this scale," said Dr. Alan Hippe, President and CEO of CTNA.

Among other investments, CTNA's capital infusion -- which ranges from $60 to $70 million, the largest ever for a CTNA tire plant nationwide -- will provide for the installation and operation of a new, state-of-the-art tandem mixer. The mixer, a Continental-patented technology and the only one of its kind in the nation, will increase productivity by making rubber mixing a quicker and more efficient process.

CTNA's plan also restructures tire operations through wage and benefit reductions for plant employees. For example, wages for hourly employees will be reduced by 10 percent and hourly employees will be asked to contribute the same as salaried employees for health insurance. Salaried employees at the plant have already experienced similar reductions over the last few years. Even after the reductions, however, wage rates for hourly employees at the Mt. Vernon plant will remain among the highest for manufacturers in southern Illinois.

"We are asking that sacrifices be made, but we are also investing in the future of the Mt. Vernon facility.  We value our employees, and our plan will help make Mt.Vernon globally competitive," Hippe said.

Dr. Hippe reiterated that decisions related to the announcement were designed to position Mt. Vernon for the future as well as to enhance CTNA's manufacturing base in North America.

"Mt. Vernon is an important asset to CTNA, as well as an economic mainstay to southern Illinois," said Hippe. "Some of our decisions are difficult ones, but I am confident that, through this initiative, we will achieve our critical goals of reducing manufacturing costs at the Mt. Vernon facility and securing CTNA's continued presence in southern Illinois and North America for years to come."

Today's announcement in Mt. Vernon follows an announcement by CTNA earlier this week of its decision to implement production curtailments at the Charlotte tire plant. The curtailments will result in significant job reductions among salaried and hourly plant employees. These curtailments are due primarily to continued high manufacturing costs at that facility, which are the highest of any Continental tire plant in the world.

CTNA's overall objective is to reduce significant financial losses while expanding its market position in the North American marketplace for all tire operations. For the last several years, CTNA has been analyzing its North American manufacturing operations and implementing initiatives to reduce costs in all areas of its North American tire business.

About Continental Tire North America, Inc.

Continental Tire North America, Inc. (www.continentaltire.com), based in Charlotte, North Carolina, is a group company of Germany-based Continental AG, a leading systems supplier to the automotive industry. With annual sales of more than a billion dollars, Continental Tire North America, Inc. has about 7,000 employees and operates six plants in North America. CTNA is a major supplier to the original equipment and replacement tire markets, selling Continental, General, Euzkadi and private brands in North America.