17 minute read
Up, up and away
from MTD - July 2021
by EndeavorBusinessMedia-VehicleRepairGroup
Company
83 Dan Callaghan Enterprises Inc., dba Callaghan Tire Bradenton, Fla. Don Mead, CEO www.callaghantire.com
83 East Bay Tire Co. Fairfield, Calif. George Pehanick, CEO www.eastbaytire.com
83 Indy Tire Centers Inc., dba Best-One of Indy 20 Indianapolis, Ind. Rich Elliott, president www.bestoneindy.com *
83 Pueblo Tires Ltd., dba Pueblo Tires & Service, Slik Pitt McAllen, Texas Ricky Ivey, general manager www.pueblotires.com *
83 Robertson Tire Co. Inc. Tulsa, Okla. Mark Robertson, president www.robertson-tire.com
83 Stratham Tire LLC Brentwood, N.H. Denise Littlefield, president www.strathamtire.com
90 Bruneel Point S Tire & Auto Boise, Idaho Mitch Bruneel, vice president www.bruneel.com
90 Clark Tire Co. Versailles, Mo. Bill Clark, president www.clarkstireco.com *
90 McGriff Tire Co. Inc., dba McGriff Tire Pros and McGriff Tire Cullman, Ala. Barry McGriff, president www.mcgrifftirepros.com www.mcgrifftire.com *
90 Parkhouse Tire Inc. 21 Bell Gardens, Calif. Jim Parkhouse, CEO www.parkhousetire.com
94 Action Tire Co. Forest Park, Ga. Rick Stewart, president www.actiontireco.com *
94 Appalachian Tire Products Charleston, W. Va. Jennifer Dial, president www.apptire.com *
94 Donald B. Rice Tire Co., dba Rice Tire Frederick, Md. Chris Chase, president www.ricetire.com Retail Retail/ commercial Commercial Total outlets Warehouse Brands
1 0 12 13 1 BFGoodrich, Bridgestone, Continental, Falken, Firestone, General, Michelin, Yokohama
0 13 0 13 3 Alliance, BFGoodrich, BKT, Carlisle, Continental, Dawg Pound, Duro, General, Goodyear, Maxam, Michelin, Titan, Toyo, Trelleborg, Uniroyal
8 4 1 13 0 BFGoodrich, Bridgestone Continental, Firestone, Fuzion, General, Goodyear, GT Radial, Mastercraft, Michelin, Nexen, Toyo
11 2 0 13 1 BFGoodrich, Bridgestone, Firestone, Michelin, Uniroyal
13 0 0 13 1 BFGoodrich, Bridgestone, Carlisle, Continental, Cooper, Dean, Del-Nat, Delta, Dick Cepek, Dunlop, Duraturn, Dynatrac, Eldorado, General, Goodyear, Falken, Farmboy, Federal, Fierce, Firestone, Greenball, Hercules, Hi-Run, Ironman, ITP, Kelly, Kumho, Mastercraft, Mickey Thompson, Nexen, Nitto, Pirelli, Roadmaster, RoadOne, Samson, Solideal, Starfire, Starmaxx, Supercargo, Sutong, Toyo, Trivant, Uniroyal, Vanderbilt, Westlake, Yokohama
2 9 2 13 2 BFGoodrich, Bridgestone, Double Coin, Firestone, Goodyear, Hankook, Michelin, Summit, Uniroyal, Westlake
10 2 0 12 1 Falken, Goodyear, Kumho, Milestar, Nexen, Nokian, Toyo, Westlake
11 1 0 12 0 Bridgestone, Cooper, Firestone, Kenda, Yokohama
1 0 11 12 0 BFGoodrich, Bridgestone, Continental, Dayton, Firestone, General, Michelin, Yokohama
0 0 12 12 0 Bridgestone, Continental, Cooper, Double Coin, Firestone, General, Globestar, Michelin, Sentry, Solideal, Titan, Yokohama, Zenna
0 10 1 11 1 Akuret, Alliance, Bridgestone, Carlstar, Cooper, Double Coin, Galaxy, Goodyear, Hankook, Hercules, Hoosier, Kenda, Michelin, Mickey Thompson, Monarch, Ohtsu, Prowler, Sumitomo, TBC brands, Titan, Toyo, Trelleborg, Yokohama
0 11 0 11 0 BFGoodrich, Carlisle, Dunlop, Dynacargo, Falken, Goodyear, Kelly, Michelin, Sailun, TBC brands, Uniroyal
0 11 0 11 1 BFGoodrich, Bridgestone, Continental, Doral, Dunlop, Eldorado, Falken, Firestone, General, Goodyear, Hankook, Kelly, Michelin, Uniroyal, Yokohama
Company
94 F&F Tire & Service Co., dba F&F Tire World and Service Center Janesville, Wis. Jeff DeVries, president www.tiredeals.com *
94 J.P. Thomas & Co. Inc., dba Thomas Tire & Automotive Asheboro, N.C. www.thomastire.com *
94 Redburn Tire Co. Phoenix, Ariz. J.D. Chastain, president www.redburntireco.com *
94 Ted Wiens Tire & Auto Centers Las Vegas, Nev. Ted Wiens Jr. president www.tedwiens.com
94 Western Automotive Ventures Inc., dba Big O Tires Las Vegas, Nev. Mark Rhee, president www.bigotires.com * Retail Retail/ commercial Commercial Total outlets Warehouse Brands
11 0 0 11 0 BFGoodrich, Bridgestone, Capitol, Continental, Cooper, Dick Cepek, Dunlop, Falken, Federal, Firestone, Fuzion, General, Goodyear, Hankook, Hercules, Kelly, Kumho, Mastercraft, Michelin, Mickey Thompson, Nexen, Nitto, Pirelli, Primewell, Pro Comp, Sunny, Toyo, Uniroyal, Yokohama
9 0 2 11 0 BFGoodrich, Bridgestone, Cooper, Delinte, Firestone, Goodyear, Hankook, Landsail, Michelin, Toyo, Uniroyal
0 0 11 11 0 BFGoodrich, Bridgestone, Continental, Cooper, Double Coin, Falken, Firestone, General, Gladiator, Michelin, Roadmaster, Uniroyal, Yokohama
9 0 2 11 2 BFGoodrich, Bridgestone, Dunlop, Firestone, Goodyear, Kelly, Michelin
11 0 0 11 0 BFGoodrich, Big O, Continental, Cooper, Dunlop, General, Goodyear, Hankook, Michelin, Mickey Thompson, Nitto, Pirelli, Sumitomo, Uniroyal, Yokohama
* Estimated 1 Mavis stores do not include 93 Brakes Plus locations or 65 Express Oil/Tire Engineers franchises. In late-2020, Mavis acquired East Haven, Conn.based Town Fair Tire Service Inc., which a year ago was the 14th largest independent tire dealership in the U.S.
2 Monro stores do not include Car-X franchises. Monro acquired two dealers that previously appeared on the MTD 100: Allen Tire Co. and Mountain View Tire & Auto Service.
3 Les Schwab Tire Centers’ store count does not include nearly 55 member-dealer locations.
4 GB Auto Service Inc. changed its corporate name to Sun Auto Tire & Service Inc. in June 2021. 5 In January 2021, Southern Tire Mart formed an alliance with truck stop chain Pilot Flying J
6 Tire Discounters Inc. acquired Porterfield Tire Inc. in Georgia during the fourth quarter of 2020
7 Belle Tire Distributors Inc. recently entered the Chicago, Ill., market
8 Sullivan Tire Co. Inc. recently purchased two Direct Tire & Auto stores in Massachussetts
9 Purcell Tire & Rubber Co. acquired Quality Tire Co., which has stores in Colorado, Idaho, Montana and Utah, in late-2020
10 Plaza Tire Service Inc.’s newest store is in Siloam Springs, Ark. 11 McCarthy Tire Service Co. Inc. divested four retail locations within the last year
12 Black’s Tire Service Inc. recently opened two retail stores in North Carolina
13 Dobbs Tire & Auto Centers Inc. opened a store in Eureka, Mo., and another in Edwardsville, Ill., in 2021
14 Bauer Built Inc. completed an expansion at its Fremont, Neb., outlet in January 2021
15 Steve Shannon Tire Co. Inc. recently acquired six Trombley Tire & Auto Stores in western New York 16 SPF MGT CO LLC has added five locations since the 2020 MTD 100 was published
17 Telle Tire & Auto Service Inc. recently acquired JBC Tire Complete Auto Care in Missouri
18 Virginia Tire & Auto LLC recently opened a store in Leesburg, Va.
19 Wonderland Tire Co. acquired Newport, Ky.-based Sumerel Tire Service in March 2021
20 Indy Tire Centers Inc. acquired Sheridan, Ind.based R&T Tire & Auto Service in April 2021
21 Parkhouse Tire Inc. opened a Bandag retread plant in Fresno, Calif., in December 2020
INDEPENDENT TIRE DEALERS EXPANDED THEIR MARKET SHARE DURING 2020
Independent tire dealers remain the dominant force when it comes to replacement consumer tire sales in the U.S. and even gained ground during 2020 as pent-up demand broke loose during the second half of the year.
According to MTD’s 2021 Facts Issue, independent dealers account for 65.5% of the U.S. consumer tire replacement market at the retail level. That’s an increase of 2.5% from 2019 levels. (In 2018, MTD estimated that independent dealers enjoyed 62.5% share.)
Mass merchandisers lost share during 2020, driven in large part by the temporary, COVID19-related shutdown of Walmart Auto Care Centers, followed by a slower-than-anticipated reopening of those outlets. At the end of 2020, it was estimated that mass merchandisers had 8% of the consumer tire replacement market — down from 10.5% just one year prior. Warehouse clubs also lost share during 2020, dropping from 8.5% to 8%.
Auto dealerships (9.5%) and tire manufacturerowned stores (6%) managed to maintain their shares of the market at a at level.
Here’s a snapshot of how many outlets nonindependent tire store chains operated at the end of 2020, courtesy of MTD’s 2021 Facts Issue: Warehouse clubs: Sam’s Club (557), Costco Wholesale Corp. (554) and BJ’s Warehouse Club Inc. (219) Tire manufacturer-owned retail stores: Bridgestone Retail Operations, which does business as Firestone Complete Auto Care, Tires Plus and Hibdon Tires and Wheel Works (2,200); Goodyear Tire & Rubber Co., which includes Goodyear Auto Service and Just Tires locations (557) Retail auto parts chains: Pep Boys — Manny, Moe & Jack (951)
The number of Sears Auto Centers locations dropped from 199, which was the chain’s total store count at the end of 2019.
Consumer tire prices continue to climb. And that includes the price of light truck tires.
Up, up and away!
TIRE PRICES CONTINUE TO CLIMB. WHICH TIERS AND REGIONS ARE SEEING THE BIGGEST GAINS? FITMENT GROUP LOOKS AT PRICING TRENDS IN THIS EXCLUSIVE REPORT
By J.P. Brooks
The past 16 months have presented the tire and wheel industry with extraordinary challenges. With COVID-19 vaccines rolling out and states and economies reopening, the U.S. tire industry has seen a dramatic recovery.
However, we are hesitant to say that the industry is fully back to “normal.” e pandemic presented us with an unprecedented economic situation and recovery has proven to be uid, as well.
Fortunately, as we emerge from COVID-19, its economic damage seems to be far less permanent than the damage experienced during the national 20072009 downturn.
Consumers are ush with extra money in the form of economic stimulus payments and an increasing number are getting back on the road.
However, pricing — not just in the tire industry, but in many other industries — remains in a state of ux.
It’s hard to nd any consumer product that has not increased in price recently.
Used car prices have increased 7% in just the past few months. Lumber prices have skyrocketed. Even items like cereal and diapers have seen price increases. Retail tire prices have not been immune to volatility.
PASS ALONG OR ABSORB?
Beginning in early 2020, many tire manufacturers publicly stated that they would be increasing prices and we noticed a gradual increase of retail prices over the course of 2020 and into 2021. In recent months, more tire manufacturers have announced price increases — with some manufacturers enacting multiple price increases since the start of the year. e reasons are many, including a combination of increased raw material costs, such as oil, as well as higher shipping expenses and other changing market conditions.
To add to the equation, the industry is also su ering from supply chain issues — most notably with a global shortage of shipping containers.
With many in the industry using a standard percentage mark-up based on brands and tiers — along with margins already being thin — we are seeing these cost increases being passed to consumers. anks to stimulus checks and many people returning to work, however, consumers seem to be absorbing the cost increases very well.
To keep a pulse on the ongoing economic recovery, we wanted to look at the rst half of 2021 in order to better understand the current state of the industry, speci cally as it relates to retail tire prices. ( e data presented in this article was culled from Jan. 1, 2021, to June 11, 2021.)
But rst, here’s some background on who we are, what we do and how we are able to gather and crunch those numbers.
Fitment Group currently views and analyzes over four million retail tire prices on a weekly basis. is data is derived from a combination of brick-and-mortar retail shops, big box retailers and e-commerce/online retailers.
In this exclusive analysis, we looked at major brands, tier-four brands or opening price point brands, popular sizes and pricing trends as they relate to the major marketing regions in the country.
BIGGEST GAINS BY TIER
So what did we nd? e quick response may be a bit obvious — tire prices have continued to increase over the course of 2021.
But this trend looks more consistent than the trend lines over the course of 2020, with the exception of the past few weeks, which have seen an increased spike in pricing.
Fitment Group analyzed 10 popular tire sizes and found that on average, opening price point or tier-four tires have seen the
Average U.S. Advertised Tire Prices by Size
Pricing By U.S. Region (Size LT265/70R17)
Size
215/60R14
235/60R14
235/75R15
31x10.5R15
205/55R16
215/60R16
215/55R17
275/65R18
LT225/75R16
LT245/75R16
LT245/75R17
SOURCE: FITMENT GROUP
Major Brand Low-cost brand Overall
$150.37 $87.14 $150.20
$166.21 $156.72 $148.61
$154.91 $97.28 $128.24
$195.17 $144.96 $174.48
$138.13 $72.88 $121.48
$126.95 $76.30 $114.00
$160.89 $85.26 $137.19
$245.98 $157.09 $223.52
$201.15 $121.56 $173.07
$213.47 $131.25 $187.73
$237.10 $149.41 $208.08
Region OPP Value Better Best Winter
Mountain $171.30 $225.79 $222.19 $232.16 $191.37
Paci c $171.55 $216.40 $221.98 $230.88 $187.03
SOURCE: FITMENT GROUP
highest rate of price increase — 11.1% — since the start of the year.
The prices of mid-tier tires have increased at a 6.7% rate and brand name, tier-one tire prices have increased at a more modest rate of 2.1%.
Choosing one size, 225/60R16, and looking across all tiers of tires and regions, we have observed that pricing for this speci c size has increased by 3.9% since the rst of the year.
Prices of tires of this size have averaged $72.06 at the opening price point, tier-four category since the rst of the year and at press time, averaged in this same category at $76.70, which represents a 6.4% increase.
In the tier-one category, tires in this size sold at $138.43 per tire, on average.
That since increased to $144.18 at press time, which represents a 4.2% hike.
THE WILD WEST
e Fitment Group also looks at tire pricing around the country by dividing the U.S. into nine granular census divisions and also rolling these markets up into four main regions.
When looking at multiple sizes and steps, the Mountain region has the highest average tire price.
We also found that the New England market has the lowest average tire prices — with an average price di erence between the two regions of 9.7%. e four main regions — ranked from the lowest to the highest average prices — are as follows, in descending order:
1. West Region 2. Midwest Region 3. South Region 4. Northeast Region
When we look at the data on a more granular level, we do see that the states of Washington, Oregon and California all trend to the lower price point, even though they fall into the West Region. at’s because the more heavily populated coasts tend to have lower average tire prices due to higher retail competition and less required transportation infrastructure. e most price volatility observed during the rst half of 2021 has been on the Paci c Coast. We did see volatility in the West and Midwest at the end of April due to a slight overall price decrease, plus a price increase in the Northeast and a consistent, steady trend line in the South.
Like many of MTD’s readers, we look to the rest of 2021 with a great sense of optimism.
As the economy reopens, people will return to work and will be increasingly anxious to travel.
Demand for tires will continue to rise. But so will tire prices, as manufacturers continue to hike their rates.
Stay in tune with what’s happening in your market so your dealership’s prices are consistent with what the market is currently bearing.
J.P. Brooks is the director of business of development at Fitment Group and has been working in the tire and automotive industry for more than 15 years, with an emphasis on business intelligence, data and digital applications. Fitment Group focuses on delivering data and business intelligence solutions that drive sales and growth for tire retailers, distributors and manufacturers. For more information, visit www.fitmentgroup.com.
How big is too big?
THE SECRETS TO MANAGING STORE COUNT GROWTH
By Michael McGregor
This year and the last one saw continued growth among many large, strategic players like Monro Inc., GB Auto Service Inc. (now Sun Auto Tire & Service Inc.), Mavis Tire Express Services Corp. and others. With all of this activity, one wonders if these and other big operators will ever run out of acquisition or green eld opportunities. e reality is that we have a long way to go before any of these players show us how big is “too big.” ere is plenty of market share they can capture to keep their cash flow machines going.
My rst reason for saying this is that the fundamentals of the economy are good. We have a rising gross domestic product, a growing vehicle population, higher miles driven per car and a growing population of vehicle owners.
A rising tide will continue to li all boats in the near-term.
When I look at some of the players that are poised for growth — Bridgestone Retail Operations, Mavis, Monro, Discount Tire, Sun Auto and Les Schwab Tire Centers — collectively, these players comprise about 5,800 locations nationwide.
The remaining outlets are a mix of national and regional players and many are single or two-location dealerships.
Also look at the decline of mass merchandisers, specialty repair shops and car dealerships nationally.
Strategic players have picked up market share from those channels. ey also seek out competitors that might be less committed to running their own outlets in certain areas.
For example, we’ve seen large commercial tire dealerships like McCarthy Tire Service Co. Inc., Southern Tire Mart LLC and Parkhouse Tire Inc. acquire GCR Tires & Service locations in certain territories. e former GB Auto Service Inc. has been particularly creative in growing its store count. In Phoenix, Ariz., by acquiring Sun Devil Auto and Wilhelm Automotive, GB Auto picked up excellent operators with good geographic coverage and can expect sales increases by the continued integration of tire sales into those locations.
There are also tens of thousands of general repair garages nationwide. Converting just a fraction of these garages that work as tire store formats could propel future growth.
I also expect strategic players to start looking for growth in rural areas, where per capita income is strong and competitive pressure is less severe.
In sum, we are a long way from seeing how big is too big.
Having said all of that, any rapidly expanding business — whether it’s 100 stores or 1,500 stores — can periodically become too big to manage or, put another way, too big to manage the way it had been managed previously or perhaps too big to manage from corporate headquarters.
Some of the symptoms of “too big to manage” include same store sales declines, higher than normal employee turnover, having a losing store count that’s greater than 20% of total store count and things like that.
How does one x “too big to manage?” I once saw a nationwide, 1,500-store group that was “too big to manage” xed in the following way.
First, it was decided that the chain could no longer be managed centrally. e 1,500 stores were split into seven zones of around 215 stores each. e zones were comprised of eight to 10 districts of 20 to 30 stores each, depending on geography.
Experienced operators who came from the stores were made zone managers and were given responsibility for all decisionmaking and strategy for their zones. ey assembled a zone o ce team comprised of a controller, a marketing manager, an HR manager and a nancial analyst.
Since the best ideas always come from the stores, everyone was in the stores and in the districts all of the time. Zone managers met monthly at corporate headquarters to share best practices and turnaround results. Marketing managers, controllers and HR managers also met monthly to share their plans. A er 10 months, it was clear who was e ective and who was not. e seven zones were reorganized into ve larger regions, the ve most e ective zone managers were promoted to regional managers and the improvements continued.
Second, the company focused everyone around three simple goals and aligned compensation with these goals. e goals were pro t improvement, tire unit sales and customer satisfaction. They were communicated clearly and consistently and remained unchanged for many years.
Lastly, the company invested in educating, retaining and improving its best store managers and associates by enhancing training programs, sharing pro ts, building morale and providing a stable and consistent eld management structure. e tire and service business still depends on the people running the stores. is is true, regardless of your size. Delegating responsibility while pushing decision-making and management down as far as you can just makes running them so much easier. ■
Michael McGregor is a partner at Focus Investment Banking LLC (focusbankers.com/automotive/tire-andservice). He advises and assists multi-location tire dealers on mergers and acquisitions. For more information, contact him at michael.mcgregor@focusbankers.com.
