MEMPHIS, Tenn.-TBC Corp. joined forces with two Mexican automotive parts wholesalers Feb. 1 to form a parts and tire distributorship that has taken TBC's Multi-Mile brand south of the border. But the venture's formation came in the midst of the Mexican peso's massive devaluation, an unexpected twist that has forced TBC and its Mexican partners to pull in the reigns on the new company.
So maybe the timing could have been better. But TBC has never been in things for the short term, according to President and CEO Louis DiPasqua, who said the venture will be a boost for the private-brand marketer as the Mexican economy recovers.
``The timing could have been more opportunistic, and what is happening unfortunately is obviously dampening the kick-off. . . ,'' Mr. DiPasqua said. ``But we did it for the long haul. It's absolutely the right thing for us to do.''
In February, the Memphis-based marketer joined forces with RASCA and DAUSA, two Mexican companies that distribute Monroe ride control and other automotive products primarily to independent tire dealers, according to Mr. DiPasqua. TBC owns 40 percent of the venture, which is based in Le¢n, Mexico. RACSA and DAUSA each own 30 percent.
TBC de Mexico operates its main warehouse out of San Luis Potos¡ and controls 10 branch warehouses throughout Mexico.
``For us it meant a good opportunity to get our distribution in Mexico with a group of distributors who are real strong marketers,'' Mr. DiPasqua explained.
Initially, the venture is distributing the Multi-Mile brand, Grand Prix shock absorbers and Hennessy Industries Inc. equipment product lines in Mexico. That product mix, however, could be expanded as the Mexican economy improves, Mr. DiPasqua said.
That improvement is expected to begin during the second half of this year, according to Scott Merlis, an analyst with Morgan Stanley & Co. in New York.
According to Mr. DiPasqua, TBC de Mexico is an extension of a companywide North American marketing approach that treats the U.S., Canada and Mexico as an economic bloc similar to Europe.
A more global approach to marketing is a ``solid strategy'' for TBC, according to Mr. Merlis, who said he believes the Mexican venture will improve along with the Mexican economy. ``The logic is compelling. The strategy was the right move,'' he said.
PaineWebber's Stephen Girsky agreed that TBC should make out better in the long run-primarily because private brand tires have yet to make their mark in the Mexican market, which has ``a strong underlying growth rate'' and an old average vehicle age.