AN EXCLUSIVE WITH NEW CTSA MD, MARTIN BUDAY
Change is the only constant. This is true of life in general and the business world at large, where business models and strategies constantly change, as do the leaders managing these concerns.
In August 2020, Martin Buday succeeded Shaun Uys, former MD of Continental Tyre SA, when he was appointed, (virtually at the time), to steer the ship of the local manufacturer. Buday brings with him a wealth of knowledge and experience, courtesy of a life-long career with Continental across various positions and geographical locations. He physically arrived in South Africa to take on his role on January 16th. Interested to find out what he has in store for the South-African based operation, SA TREADS caught up with him for an exclusive interview.
Talk us through your earlier career and what led up to your current assignment as MD of CTSA.
I entered the tyre business fresh from University, (I studied Economics and International Marketing and Trade Trading), in 2002 when I joined a small mid-size private tyre manufacturing company in Slovakia which was later acquisitioned by Continental in 2006. Later, and now as part of Continental, I progressed into the specialised areas of marketing and international trade.
What are some of the highlights of your career thus far?
I can name three off the top of my head. In 2005, I was stationed in Ethiopia for some time. Later, in 2009, I assumed responsibility for Continental’s MENA (Middle East and North Africa)
operations in the capacity of Regional Manager. Next, in 2014, I was offered a position in the Czech Republic to head up Sales and Marketing for the Czech Republic and Slovakia for Continental, alongside assuming the Directorship for one of the biggest tyre plants in that region.
These different assignments enhanced my knowledge and experience base, while also exposing me to international markets.
What appealed to you about the South African position?
On a personal level, and following my stint in Ethiopia, I somehow felt like Africa was my destiny. There is no other way to explain it. From a professional standpoint, the opportunity to oversee marketing and sales in tandem with manufacturing, was somewhat of an exciting challenge I could not turn down.
What are your impressions of the South African tyre market so far?
Overall, I am getting a positive feeling of the country and its unique market dynamic, despite not being able to physically travel the country due to Covid-19. The market is heavily retail driven and highly competitive which intensifies competitive pressure to a higher level than some of the other markets I have been exposed to. While this presents numerous challenges – both to local manufacture and imports – it also creates a host of opportunities for us to have direct access to the customer.
Another perception I have formed, is that although the South African tyre market is largely a traditional one, transformation is becoming more evident, with several dealers directing their attention to other affiliated services such as brakes, shocks and other similar vehicle and mobility services. Tyre margins are shrinking so it is important that they try to open another revenue opportunity and services towards the customers.
Which is why we are encouraging our Best Drive stores to look at developing other business opportunities, in short, non-rubber activities so as to be able to offer the full spectrum of services. This is the way of the future.
What are some of the problems they are encountering in their quest to diversify their product offering?
I would say that sourcing and training suitable staff that can carry out highly technical services is a big hurdle for many. In addition, stores need to invest in suitable machinery and equipment in order to be able to execute these additional services professionally and to the customer’s satisfaction, but cash flow does not always permit this.
How do you believe the pandemic has changed the store/customer experience?
Covid-19 has illustrated that customer purchasing decisions are changing, everything from how you communicate with the customer, to the way appointments are made, ordering tyres and the like. Personal interaction is not always possible in the era of a pandemic, and we are not used to this. Traditionally, the customer would come into a store where he would interact with a salesman at the counter. Going forward, traditional trading models will need to change and adapt accordingly, in order to remain relevant and up to date.
Then there is the issue of long-term sustainability. Although not yet prevalent in South Africa, in Europe, consumers are growing ever more aware of the need to change their buying habits in the interests of lowering CO2 emissions and are starting to move away from standard vehicles, in favour of electric ones.
So, how does this influence our business and how do we adapt in order to provide service to the customer? Tyres are unfortunately becoming a commodity, nothing more. We, therefore,
need to find a way to serve customers in a manner they are prepared to pay for.
How do you see the industry evolving to cater for these new consumer needs?
There are no clear answers, unfortunately, especially given contrasting market realities. What works in some countries, does not work in others. Transformation requires thorough investigation of each specific market, in order to arrive at a viable solution. This is a big challenge, but every company around the world is looking into new initiatives in this regard.
Would you say the tyre business is evolving towards online purchasing?
While I don’t see this trend being a strong one for the immediate future here in South Africa, it will certainly rise. It took several years for the online business to grow in Europe, but now, for example, online sales account for around 30% of total sales in the Czech Republic.
As far as the South African market is concerned, change will not happen overnight, but the onset of Covid-19 is certain to speed up the process – not necessarily purchasing online but definitely searching and interacting online. Consumers are ready to reevaluate their previous purchasing habits, especially as the new generation relies solely on their mobile devices for
all their interactions.
What will the tyre business have to do in order to adapt to this mind shift?
We need to ask ourselves a series of important questions, namely: how do we drive customers to our points of sale and how do we influence the customer’s purchasing decision in favor of our product offering? Today’s consumer is doing their research and we need to be prepared for this. A totally different approach is required in order to trade successfully and compete effectively.
Speaking of competing, is CTSA still importing all its truck tyre sizes, and if so, how are you able to compete against locally produced makes?
Locally produced truck tyres have a certain advantage, as they are not as affected by time delays, however, our premium truck tyres are specifically aimed at the more sophisticated operator who is looking at achieving overall cpk. While our premium brand of tyres might cost a little more at the original point of purchase, they deliver better mileage, less downtime due to fewer roadside breakdowns and better retreadability.
There is mounting pressure on logistics companies with respect to the routes they travel and the cargo they carry and these companies are looking for longterm cost benefits. These is where we can compete effectively.
Would you say your sales force is suitably equipped to service these fleets?
Last year, we began implementing our ‘customer centricity’ strategy in order to be able to better respond to our customers. This led to combining all aspects and segments of the business into one.
That being said, for sophisticated fleets, we created a separate sales force as this market segment requires a different skills’ set. The truck tyre market is much more challenging and we are working tirelessly to train and equip them appropriately. We are also focusing on being able to identify those ‘cluster customers’ and their needs, and respond in an adequate manner.
So, would you say that becoming ‘customer centric’ is a key focus area?
Definitely! Customer needs will differ and while we do not know exactly how transformation in the market will play out, we need to be agile and flexible enough to meet that change. Margins on actual products are shrinking. We cannot focus on products alone. Today, it’s all about providing a quality product and service, along with logistics and communication with the customer. In short, it’s all about the overall execution of the customer journey.
Are you planning to invest further in your plant?
We have never stopped. Even last year, we invested tens of millions. A manufacturer cannot keep a plant unmaintained as this will ultimately reflect in the quality of your output. Quality remains crucially important, particularly given the export markets we service. Every region comes with its own unique requirements, so we need to keep investing heavily, if we are to meet all these different international standards and requirements. The export business is vital to longterm sustainability because when one market collapses, you have others to rely on.
Where does CTSA export to?
We export worldwide, with our two biggest territories being Europe and the USA. Of course, the majority of our production is for South Africa and the African market.
Are you planning to launch any new products during 2021?
Not as such. However, we are preparing for the arrival of the new ContiSportContact 7 which will complement our current passenger tyre offering. This should arrive towards the second half of 2021 or early 2022.
Given your knowledge of other world markets, what are some of the lessons we can learn from them with respect to the collection and disposal of waste tyres?
Suffice to say this is a global topic, not only in South Africa. But I must admit that in the last two months, the current lack of services around waste tyres is very much being talked about, both by our dealers and our own manufacturing facilities.
Your question is not easy to answer. There is not one system that is working better than others. Without being too critical, where South Africa is concerned, we desperately need for legislation to be introduced and enforced. The legislation should be far reaching and must define in a direct and precise manner the responsibilities of each and every party within the value chain, including thoseof state-owned departments. The responsibility cannot fall solely on the tyre manufacturers.
Has such legislation been introduced in the markets with which you are familiar?
Yes, legislation does exist in other markets. In the Czech Republic for example, state inspections take place randomly to ensure that everyone is complying with the legislation. This is essential for long-term success. That being said, no system, anywhere in the world is perfect. There is room for improvement.
Complying with legislation should not be seen as an inconvenience. We all want to contribute towards a sustainable environment. If end-of-life tyres are not properly treated, collected and recycled, this has huge implications for our planet. Waste tyre collection and disposal is one of our top points of discussion at the SATMC. A final draft of this debate is currently under preparation. Without that there can be no workable solution. We are hoping that government, together with industry, will take the matter seriously. *see story on page 8 for more detail.
How does CTSA plan to differentiate themselves from their competitors?
There is no magic formula. We need to ensure that we position ourselves ahead of our competitors with respect to product, services, customer interaction and providing customer solutions. The internal company slogan is simple but self-explanatory: Continental Tyre Business is a People Business. One can have a great product, but if you are not being perceived by your customers as reliable, likeable, agile and respectful, this will not be enough. The people representing your company will make the difference in the end.
Are you currently recruiting new blood into CTSA?
Sourcing new people is expensive and not always that successful. We would rather invest in proper training and retention of staff, by growing and developing them into new competencies that will be required going forward.
To sum up, how would you describe your vision for CTSA?
My hope is that we not only sustain, but also grow the business. This is not easy. Bear in mind the market declined in Jan/Feb, making it even more critical that our vision encompasses something we can successfully implement into the market. Our ‘customer centricity’ strategy, coupled with a quality product and service will drive us forward with the aim of positioning CTSA as the most reliable partner inside of the tyre industry.
By understanding the realities of our particular market, we can take our advantages and make them even stronger. In short, we will focus on the part of the market where we can utilise
our strengths. In tandem with this, we also need to prove to the customer that we are working on our weaknesses, so as to change any negative perceptions that might exist. My stint with the Middle East market proved this can be done, even though it took up to five years for effective changes we implemented to be realised by the market.