AKRON—1998 was a year full of acquisitions, mergers, new products and new marketing plans. Looking back, it's apparent that consolidation was an important trend among independent retail tire dealerships, while diversification of sales/distribution channels may have been the most important issue for tire manufacturers.
Among the most active companies in expanding retail outlets this year were Larry Morgan's Olson Tire Total Car Care, Discount Tire Co. and J.H. Heafner Co. Inc.
Other dealer groups, manufacturers and trade associations continued to eye each other like teens at a sock hop, trying to figure out with whom they wanted to dance.
And a recap of the retread market shows one tire maker, Michelin North America, making a push for a large piece of the pie. Meanwhile, Bandag Inc., the largest provider of retread systems, was looking to enhance its emerging commercial dealership division.
The past year also saw the world's three largest tire manufacturers begin delivering run-flat tires to dealer showrooms.
Goodyear, the largest U.S. tire maker, said it would make a run to regain the No. 1 spot in the global market by 2003.
And national chains like Penske Auto Centers and Sears, Roebuck and Co.'s National Tire and Battery (NTB) continued to pursue even greater market shares—news that gave independent dealers even more reasons to lose sleep.
In June, Penske began marketing its own brand of tires made by Kelly-Springfield Tire Co. In March, Sears said it would accelerate the pace of expansion for the NTB chain.
On the acquisitions front, mega-dealer Olson Tire added 118 stores with an estimated $201 million in sales. The Clearwater, Fla.-based retailer acquired Hibdon Tire Centers in Oklahoma and Cincinnati-based Michel Tire Co. Also, Mr. Morgan and company announced it would purchase Avellino's Tire and Auto outlets in Pennsylvania and New Jersey and Wheel Works in California, effective Jan. 1, 1999.
Meanwhile, TBC Corp. took control of its largest customer, Atlanta's Carroll Tire Co. and its $150 million a year wholesale and commercial business. TBC also partnered with two regional dealers to acquire an interest in 43 stores in Missouri and Las Vegas while continuing to add to its roster of more than 450 franchised Big O dealers.
North Carolina's J.H. Heafner nearly tripled its annual sales with two huge acquisitions. In April, the Lincolnton, N.C.-based firm purchased Competition Parts Warehouse of California, a wholesaler/distributor with annual sales of about $125 million. A month later, Heafner bought Itco Logistics Corp. of Wilson, N.C., with about $350 million in yearly sales.
These two purchases make Heafner a coast-to-coast company with annual sales of more $700 million.
For many independent dealers, continued survival meant partnering with a larger group for greater purchasing power and marketing assistance.
The Tire Alliance Groupe grew to 17 members with about 900 stores. TAG added several major U.S. groups and signed its first Canadian member: Tirecraft Auto Centers, based in Edmonton, Alberta.
American Car Care Centers also continued to grow, reaching 885 members.
Corporate offices at tire manufacturers were buzzing with activity as the push was on to introduce new products, develop new channels of distribution and improve the efficiency of dealer networks.
Goodyear introduced run-flat tires in the spring and a line of winter tires in the fall. But, a bigger story was the Akron-based company's announcement in August that it would supply tires to Sam's Club warehouse stores, a subsidiary of Wal-Mart Stores Inc.
Many independent dealers were less than pleased with this development that would put even more price pressure on their thin margins.
Pam Fitzgerald, Tire Association of North America President, and Executive Vice President David Poisson claimed a victory of sorts when Goodyear consulted with the association before announcing the deal. Goodyear said sales at Sam's Club wouldn't have much impact on independent dealers.
Michelin and Bridgestone/Firestone Inc. also introduced run-flat tires and announced changes in programs for their dealers.
Michelin sought to improve fill rates by pruning an unspecified number of dealers from its Alliance program. In January, the company also informed four private-brand marketers that it would stop supplying them by the end of the year.
In May, BFS announced a new initiative, ``Tire Starz,'' designed to provide sales and marketing support to smaller independent dealers who commit to sell at least 51 percent BFS brands. BFS said this program would be administered mostly by key distributors with corporate support.
In its 75th anniversary year, Dunlop Tire Corp. finished its second consecutive year of profitability after 10 years of red ink. But another tire maker was about to be fully absorbed by its parent.
In April, Goodyear's Kelly-Springfield unit announced a voluntary recall of 595,000 tires due to circumferential cracking in the sidewall. It was the fourth-largest tire recall in history.
The news got even worse at Kelly's Cumberland, Md., office when Goodyear announced in October it was closing the division's headquarters there and moving its operations to Akron. Only the Kelly brand name will remain as the last vestige of a company founded more than a century ago.
Titan International Inc. continued work on its new tire plant in Brownsville, Texas, but, the firm's Titan Tire Corp. unit had to deal with on-going strikes at its Des Moines, Iowa, and Natchez, Miss., plants.
Continental General Tire Inc. announced plans to expand production capacity at three of its four U.S. plants. Conti also faced a strike as workers walked out of its Charlotte, N.C., plant in September. The company also bought tire maker CIL/ Euzkadi in Mexico and announced plans to debut Continental farm tires in North America.
On the association front, Ms. Fitzgerald appeared at the winter meeting of the International Tire and Rubber Association, where she promoted the idea of merging the two groups and their annual trade shows. ITRA rejected such a merger, but the two groups have continued discussions about cooperative ventures.
In April, ITRA held its annual meeting and show in Louisville, Ky., and announced that the 1999 show would be held outside Louisville for the first time—in Nashville, Tenn.
In May, TANA's board voted to reorganize, cutting the number of directors from 88 to 36, and to allow the membership to elect the association's officers. These changes will take effect July 1, 2000.
Jim Shook, owner of Shook Tire Centers in Las Cruces, N.M., took over as TANA's new president at the November expo and pledged to improve inter-association relations.
Even though retread sales were estimated to be relatively flat in 1998, a couple of large manufacturers began to case this market. Michelin Retread Technologies Inc., was on target to open 20 plants with an annual production of 750,000 tires by mid-1999.
Meanwhile, the nation's leading retread system provider, Bandag, through its subsidiary Tire Distribution Systems Inc., purchased three more formerly independent commercial dealerships to improve its emerging retreading and commercial tire sales operations.