KENT, Wash.-AKH Co. Inc., the City of Commerce, Calif.-based firm that operates tire dealerships in that state, the Pacific Northwest and Utah, primarily under the Discount Tire Centers name, has sold its Washington and Oregon stores to a partnership that will retain some ties to AKH. The deal, for approximately $500,000, was effective Feb. 1. It involves a total of 15 stores-10 in Washington that operate as Evans Tire & Service Centers, including a number in the Seattle area, and five Discount Tire Centers stores in Oregon.
AKH is owned by Andy Andonian, the company's chairman and founder, his brothers, John Andonian, president, and Hratch Andonian, CEO, and their father, Kevork.
The company-which celebrated its 20th anniversary last year-now owns 85 outlets in California and operates several in Utah under the name David Early Tires.
The new company that acquired the AKH outlets, MKZ Inc., is owned by a partnership consisting of George Derbedrossian, vice president; Sam Zartarian, an Andonian third cousin who becomes MKZ secretary-treasurer; and Markar Zartarian, Sam Zartarian's uncle, who lives abroad.
It has set up corporate headquarters in Kent, sharing space in an Evans Tire outlet.
Sam Zartarian told TIRE BUSINESS the company purchased the assets of 15 outlets. Subsequently, after studying the financial performance of the stores, it was agreed that AKH close four ``weak'' ones, including three in Washington.
While his background is administrative, Mr. Zartarian said Mr. Derbedrossian is a mechanical engineer who at one time worked for a Sears, Roebuck and Co. automotive center. Both are relocating their families from Southern California.
John Andonian said the Washington and Oregon stores were sold because AKH ``is not a dominant player in those markets.
``Our options were to either become dominant or exit the markets. We have a stronger position, and prefer to focus our attention and resources'' in California, where he said the company ``still has a lot of room to grow.''
Former AKH stores in Washington and Oregon will continue to fly the Discount Tire and Evans Tire flags, Mr. Zartarian said, and will cooperate with AKH ``on warranties and service for our customers.''
Meanwhile, he said MKZ will retain Andy Andonian as a consultant for up to a year, to draw on his background and expertise.
The manager of a Discount Tire store in Portland, Ore., Dave Gil, provided additional perspective on the acquisition, and why AKH is refocusing on California.
Mr. Gil, 41, has been with AKH for eight years and relocated to the Pacific Northwest to open a Discount Tire outlet. He will continue with the new owners.
He cited the deaths last year of Winston Tire founder Sam Winston and 4day Tire co-founder Donald Carr as reasons why ``some serious changes'' will be occurring in California's tire retailing landscape over the next couple of years.
One of the closed AKH outlets, in Vancouver, Wash., across the river from Portland, was opened several years ago by Mr. Gil himself but, in his opinion, quickly found itself in a losing battle for business.
While Oregon has no sales tax, there is an 8.6-percent tax in Vancouver. Consequently, Mr. Gil said on expensive purchases such as sets of tires or custom wheels, many customers found it ``well worth it to drive across the river for a $40-$50 savings. Some 15-20 percent of my business (in Portland) is from Vancouver.''
He believes the sale to MKZ is ``great news, from my point of view. We've always been an extension of a California company, never an Oregon company targeted to this market,'' and the California and Pacific Northwest markets are distinctly different.
While California's economy has struggled to climb out of a recession the past few years, Mr. Gil said Oregon and Washington tire outlets ``have been very fortunate-we sit on a very strong, thriving economy.
``I didn't have a month last year when I didn't exceed my tire unit sales from the previous year-and I don't think there's many dealers in the country who can say that.''
He said the Portland market is ``extremely strong.'' Firestone has built two new stores there and, within the last five years, Les Schwab Tire Centers Inc. has opened about eight new stores there and PriceCostco has opened two warehouse clubs.