Continental discusses tyre pricing, sustainability

CONTINENTAL is one of the major premium tyre companies represented in Australia and around the world supplying both OEMs and the retail sector.

Locally, the brand is overseen by Mitchell Golledge who also wears the company’s more elevated Head of East Region Asia Pacific hat with the responsibility for driving business growth in the broader region.

A Melbourne native, Mr Golledge holds a Master's Degree in Business and Marketing from RMIT University but started his working life in a much more down to earth vocation… as a boilermaker and tool maker/machinist.

This has no doubt grounded Mr Golledge through his working life thus far and is evident on conversing with him, which GoAuto was able to do recently at the launch of Continental’s new MC7 performance tyre in Sydney.

It gave us the opportunity to question this tyre industry “big wig” on a range of issues affecting Continental and the tyre industry in general.

We first asked about the new MaxContact MC7 which Mr Golledge said would be available from June 1 at a similar price to the current MaxContact MC6.

“Look at the price of the current tyre and that should tell you where the MC7 will be priced,” he said.

We checked and found the RRP of the MC6 averages out at around the $200 per tyre, size dependent with some discounted to as low as $140 though that probably does not include delivery charges, fitting, balancing and old tyre disposal that some sellers apply.

“The MC7 is a more dedicated tyre than some others and is manufactured with an EV check mark that denotes they are suitable for electric vehicles, as will all our seven-series tyres”.

“Anybody who enjoys driving will like the MC7. A big focus with these tyres is reduced rolling resistance that helps optimise an EV’s efficiency,” he added.

With regard to competitors, Mr Golledge said there were plenty including Michelin, Bridgestone, Goodyear and many others in the “premium” end of the market where Continental has its primary focus.

Asked about the vexed used tyre problem Mr Golledge was able to comment from first-hand experience on what is happening in Australia.

“I am a director of Tyre Stewardship Australia (TSA) which has government support to develop solutions for end of life tyres,” he said proudly.

“The TSA works towards creating productive outcomes for end-of-life tyres (EOLT) through increasing the use of locally tyre-derived products across segments like rail, roads, and civil engineering.

“But there is still plenty to do as a proportion of our used tyres are cut up, put into bales, and sent overseas as fuel for furnaces producing a range of other products or electricity.

“We have secured government grants and are heavily vested in sustainability, but we must find new uses for old tyres. That can be things such as road mix or use in the cement industry but a lot of EOLTs end up being sent overseas after being chopped up.”

Regarding parallel tyre imports that sees some retailers buying large quantities of tyres from overseas then selling (undercutting) them here in direct competition to the factory backed operations Mr Golledge said,“ We do have conversations with some of our retailers but generally are not that worried about parallel imports”.

“That’s because our tyres are specified for the Australian market in terms of quality, design, local demands, and expectations whereas parallel imports might be made for a range of other specifications like driving in cold or icy conditions using soft compounds and the like,” he said.

“These tyres have probably been manufactured for other areas so it’s a really a case of us educating our retailers.”

With inflationary pressures on everyone’s mind, we asked Mr Golledge about the price of tyres particularly post COVID-19 to which he replied, “They haven’t risen as much as many other products including cars that have gone up in that period”.

“We (tyre manufacturers) are affected by three things basically: the price of raw materials, the exchange rate and freight costs,” he continued.

“The ‘rubber’ that’s used in the manufacturing of tyres comprises some 100 different elements so that’s difficult to expand on but in terms of freight, that has come down dramatically from a high of $12,000 per large container during COVID to $2000 today.

“But against that cost reduction is a drop in the exchange rate for the Australian dollar, that is now down as low as $US0.68 cents or less, so it all fluctuates.

“Continental’s prices have remained competitive since COVID. Another effect of the pandemic was that it changed our negotiations with OEMs to whom we supply many tyres but like the availability of semi-conductors that has levelled out and is more stable.

“We have numerous tyre manufacturing plants across the globe, basically transplanted German facilities that produce a German engineered product with quality assurance.

“Our top plant at the moment is in China with others nearby in Malaysia and Thailand,” he concluded.