THE FUTURE BEYOND TIRES
An interview with Enrico Moncada, Continental Italy Truck Replacement business unit manager
Fleet service and in-depth analysis of cutting-edge information and technology: this is how the German multinational company faces challenges and opportunities in the truck tire market. We spoke with the new Italian manager of the division, Enrico Moncada
The rising cost of raw materials and the need for a 360° interaction with a service provider are only two of the great challenges the tire market is having to face. New technologies, fleet outsourcing, competition from low-cost products are other important factors that can represent either a risk or a source of opportunity, depending on how quickly one is able to understand and anticipate these trends. We spoke about them with Enrico Moncada, recently appointed as Continental’s Truck tire business unit in Italy filling the shoes of an important figure such as Daniel Gainza, who, in the mean time, became Director of Marketing Truck Tires EMEA.
First of all, how did the new year start?
The beginning of the year was marked by the rising cost of raw material. And although this has created some undeniable difficulties, we cannot ignore a positive factor: the great impact this has had on budget tire prices, which are now positioned far too close to premium products. Top of the range products, therefore, can now enjoy a more favorable quality / price ratio, and those who are able to make the most of this situation can successfully stem the competition from low-cost products, which has been particularly strong in recent years.
In 2016 the market witnessed an increase in new truck registrations, even in previously stagnating sectors such as earth movers and off road trucks, and 2017 is showing a similar trend. How is the current scenario then affecting the tire market?
Here, too, looking beyond a figure that may, at first glance, seem negative, I see a great opportunity. I am not referring only to the higher OEM business volumes: any transporter who has just purchased a new truck will pay attention to many factors: safety, comfort, fuel consumption, mileage. A premium tire will guarantee these qualities better than a low-cost product. Therefore, when the time comes to replace the original equipment our tires will be more appealing.
Continental has just won a major Cost per Kilometer contract to supply tires to the Arriva group (operational arm of the German railways in passenger transport by bus, active also in Italy especially in the North, from Piemonte to Friuli). What did your offer include which allowed you to win?
Our wide range coupled to our technology played a crucial role. Conti Coach, City Plus and Urban are three product lines that encompass all the kinds of applications typically found in large groups such as Arriva, which manages urban networks, long distance passenger services and long range rentals. Our technologies, able to gather large quantities of data to be used in understanding a tire’s behavior in real life, enable us to provide innovative solutions for fleet tire management. Already now, and more so in the future, we are able to know whether a tire has been working properly, through the data gathered by our TPMS Conti Pressure Check system, and detect the real condition of the casing tracing back its life cycle through retreading and re-grooving operations.
Since you mentioned retreading, the market was struggling as of late…
Here, too, we have noticed a change of attitude: very few users are turning to a retreaded product as an alternative to a low-cost product. On the other hand, premium tires retreaded through equally advanced technologies are gaining popularity and keep growing, since they are no longer viewed as a temporary solution, but part of the tire’s life cycle, planned from the very beginning and using technologies that guarantee the same quality of a new tire. ContiLifeCycle retreading program is a necessary step for all those who care about quality and maintenance costs.
In the past we often spoke about the “four pillars” of Continental’s strategy. Is this philosophy still valid?
Absolutely, though we should point out that in reality the pillars are five and, above all, they are all linked to each other and depend on an essential aspect we greatly care about: pillars indeed, but made of people. We're talking about products, solutions, retreading, brand and network. All linked to each other: you cannot offer the right solution if you do not have the right product or a network able to support the company, in turn the network cannot work efficiently if it does not offer strong and consolidated brands, and so on.
Last year we witnessed the re-launch, in great style, of Semperit. How are things going? And, most especially, has it become the specialized brand for quarries and earth movers?
Semperit, like other standard brands in our portfolio (Barum, Matador, and Uniroyal, editor’s note) offers a complete range for all applications, which is why the brand is receiving a good response from the market. Its off-road tires are certainly important, but I would not go as far as saying that it is a specialized brand. Instead, it offers a high quality line of products at a very attractive price. Moreover, our standard brands have gone through a profound change as far as their sales teams are concerned.
Considering the wide range of products and services, organizing a network looks everything but simple…
Definitely not, also because our Conti360° network plays a pivotal role in our relationship with customers. Our network is responsible for passing on to our customers a reassuring message ( "we’ll look after your tires...") and that is why we are continuously investing in its update and development. A network works well if the partners are willing to exchange valuable skills and information, and if the economic benefits of the cooperation are tangible.
We have often mentioned transport fleets, but the Italian haulage panorama continues to be made up of many small companies. How do you reconcile all this with the need to update the industry and cope with a very fierce foreign competition?
There are very virtuous companies even among small businesses, just as some large transport fleets, fortunately not so many, persist in paying little attention to cost containment. The largest companies have to pay more attention to matters pertaining to tires, yet, regardless the number of vehicles what is really important is understanding how tires account directly for 5% of the costs and greatly influences another 40%.
Going back to transport fleets, is the relocation in Eastern Europe of a number of companies going to create contractual issues?
Not really, because the basis of our contracts is European, and our European network is present throughout the continent. Conti360° FleetServices contracts include the whole of Europe with the same service standards, and calls are handled centrally.
Transport vehicles have radically changed, especially with the introduction of the latest Euro emission classes. But how far has the development of tires come, and how will it evolve in the future?
First and foremost, towards better performance. Recently, for example, we have witnessed what can be considered an important transformation in the design of tread patterns on drive axles with the adoption of sipes. Here we will always have to find a compromise: a tire with a good grip will not necessarily give good results in terms of fuel consumption, and vice versa. But our research and development department is always looking for innovations to improve these aspects. Further important developments will see the creation of “talkative” tires and casings, able to gather and transfer large amounts of data. Collecting large amount of data from normal daily operations is the fundamental key to provide a better service to the customer. At this time the development of tools to facilitate the analysis of tire conditions is one of the aspects in which we are fully involved. And here is where Continental excels compared to most of its qualified competitors: being a complete automotive systems player, who can exchange and integrate large amounts of information in its various divisions.