By Brian Cruickshank, AAP
Editor, aftermarketNews.com

FRANKFURT -- In late August, aftermarketNews’ Brian Cruickshank met with the marketing team from Continental Teves at its Frankfurt, Germany headquarters. He was invited to attend a special advance look into Continental Teves’ plans to roll out a greatly expanded all-makes premium brake and rotor program for the North American aftermarket. Cruickshank sat down with the program’s key marketing leaders to discuss the announcement, which will be officially made at the AAPEX Show in Las Vegas.

AMN: I think it’s safe to assume that people are aware of Continental AG, certainly on the tire and belt side of the market. They are probably less familiar with the ATE brand. Please begin by talking about ATE, provide a brief history, your current role in the aftermarket and your current products.

Samir Salman, Senior Vice President, Global Aftermarket: Teves is the division that Continental bought in 1998, and is now known as Continental Teves. It’s the brake division of Continental AG, and all products are branded with the name ATE (pronounced Ah-Tay). We are roughly $1 billion company in North America and we are one the main suppliers of brakes - especially when it comes to electronic brake systems - for the OEMs.

David Mestdagh, Director, North American Aftermarket: From an aftermarket perspective, we have a significant presence here in Europe; we’re number-one in Germany, for example. In North America, we are known primarily through the import distribution channel because the products we’ve distributed into the U.S. (up until this point) have been for European applications only. We’re well known among import specialists, and installers know us because of our OE presence.

AMN: You’ve done some brand-awareness studies in the U.S. among technicians and distributors. What were the results of those studies? Were there any differences between the techs and the distributors?

SS: We conducted the brand awareness focus groups all over the U.S. The first outcome of these studies was that we learned the awareness of the ATE brand is higher on the East and West coasts. That’s because the German car population is higher in those regions. But if you go into the middle of the country, those results indicated significantly less brand awareness, and again, it’s mainly a function of the vehicle population. Among the two groups (technicians and distributors), brand awareness is higher among technicians - they are, after all, the ones taking the wheel off the car and seeing the OE supplier’s brand stamped on the parts. Interestingly, brand awareness of ATE, in general, is higher than we had initially anticipated.

The reason we did these focus groups is because we needed to know where the ATE brand stands today, and to give us a starting point from which to move forward. We also wanted to understand the market’s feeling toward an OE-oriented manufacturer. We discovered that there’s more demand than we initially thought, and that’s because cars have become more and more complex. OE-oriented automotive products, such as brake parts, are more in-demand among technicians. Technicians don’t want comebacks, and they feel that OE suppliers provide the kinds of products that won’t result in a comeback.

AMN: These brand awareness studies were, of course, in preparation for your announcement. So as not to steal your thunder, what is the announcement and what led ATE to make this decision?

DM: At the AAPEX show, we’re going to introduce our ATE PremiumOne brake and rotor program. Our PremiumOne program is designed to penetrate the Asian, as well as domestic vehicles in North America. We’re already an OE supplier on many of these vehicles. We’re one of the leading brake systems suppliers globally - and that’s not just on European vehicles. It includes North American and Asian vehicles as well.

We are leveraging our OE position, our OE brand and engineering expertise to create this all-makes program. Our product is meant to support the professional technician and his reputation with quality products. We’re looking for distribution going forward, in addition to continuing to support the success of our current customer base.

There were a number of steps that led us up to the launch of our expanded product offering. One was our R&D, focus groups and examination of the opportunities that exist in the market. Two, we needed to share with our existing customer base what we’re doing and how we’re going about it because they are a valued part of our organization.

We opened up a distribution facility in Louisville, KY in January. At that point, our existing customers began to receive product from us with a 48-hour turnaround, rather than waiting weeks for containers to be shipped from across the ocean.

AMN: As a follow up, why now?

SS: In the past, there was a clear niche for the import specialist. The traditional distributors - were like a separate world. But these two worlds are becoming more and more intertwined. As proof of these two worlds coming together, you need only to look at GPI’s acquisition of Worldpac. The time is over when a manufacturer could choose which ‘world’ to serve. If a company’s product offering is limited, then how successful can it really be? Considering all this, it’s apparent that coverage has to be broader.

AMN: How will you support the program?

Don James, Marketing Manager, North America: We have focused a lot of energy on programs to support the launch, such as electronic cataloging, as well as a campaign centered around AAPEX that includes trade advertising and other means of generating awareness in the marketplace. Going into 2006, we plan on continuing those efforts, as well as follow up with our pad program, which we plan to support in the same manner (as the expanded rotor program).

AMN: Your focus groups have shown that you have good brand awareness on both coasts in the US, but less so in the rest of the country. How does that affect your role-out strategy?

DM: The interest in the ATE brand definitely exists on the coasts, and that’s simply because of the car parc in those regions. So naturally, that’s where we’ve begun our conversations with distributors.

We do not intend to sign up every distributor in the market. Our objective is to be selective with the key distributors that are successful in their markets and can be successful with our product offering. Our efforts will begin to accelerate around AAPEX when we’ll begin to sell the ATE PremiumOne rotor program. Up until now, it’s been in the exploratory phase.

AMN: What are your distribution goals?

DM: We’d like to be selective in the major metropolitan markets because we don’t want to saturate the market. We’d like to give our distribution partners the ability to benefit from margins that they feel are appropriate in their markets.

We have a great opportunity here - we’re new and we’re not looking to knock off the big players in the market. We’re going to complement other product lines because we offer one premium line to the premium market.

AMN: So, then you’re not taking a “good, better, best” product line strategy? Will that be a hurdle to overcome with distributors that might prefer a vendor with broader coverage at a variety of price points?

DM: We are not taking, as you put it, a “good, better, best strategy,” and I truly believe it’s going to benefit us. There is a trend toward premium product and OE product in the market. So these market trends play very well into our strategy, and that is to come into the market and provide one choice. There will be no confusion over what quality level a customer is getting - it’s all premium. We want technicians, jobbers and WDs to know that they can stake their reputations behind each ATE product.

Editor’s Note: Continental Teves will be exhibiting at this week’s AAPEX Show in Las Vegas. You can see the new ATE product at their booth, #874

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