SAN FRANCISCO—Add Tire Pros to the list of tire distributors with national aspirations. Tire Pros owner Aspen Enterprises was sold in mid-January to Itochu International Inc., the U.S. arm of a large Japanese trading company, setting the stage for the company and its Am-Pac wholesale arm to expand aggressively.
The newly acquired company, rechristened Am-Pac Tire Distributors Inc., is developing strategies to become a ``formidable competitor'' in the North American marketplace, said Dennis Mangola, co-founder of Aspen and president and CEO of the new Am-Pac.
From a base of 98 stores—85 franchised and 13 wholly owned Tire Pros locations—and annual sales approaching $100 million, Am-Pac plans to expand its Tire Pros concept beyond California, concentrating on areas west of the Mississippi at first but eventually looking nationwide, Mr. Mangola said.
Itochu International, a subsidiary of Japan's Itochu Corp.—considered one of the world's largest trading companies with annual sales of more than $115 billion—paid an undisclosed sum to Aspen owners Richard Robinson, Richard Smith and Mr. Mangola for the assets of the 28-year-old company. Messrs. Robinson and Smith also continue in management positions with the new company.
Mr. Mangola declined to discuss specifics of Am-Pac's growth strategy, other than to say it won't be growth for growth's sake.
``We plan to take our time and grow intelligently. Expansion will be profit-driven,'' he said. ``Our plan is to grow using the Tire Pros franchise concept, to continue supporting the small independent dealer.''
At the same time, though, Am-Pac Tire won't rule out acquisitions, especially considering the security of having the added financial support of Itochu. The company may also add a few company-owned stores, but these would be limited to existing marketing areas in California, Mr. Mangola said.
``Am-Pac...will provide (Itochu) the opportunity to finally establish retail and wholesale operations in North America,'' said Tony Yanashima, vice president of Itochu International and chairman of Am-Pac.
``Aspen will provide Itochu with proven leadership and marketing strategies that complement our overall growth plans,'' Mr. Yanashima said, emphasizing that Aspen's top management will continue with Am-Pac in key decision-making positions.
``We've been planning for a few years now to get involved in the tire business beyond being solely an importer,'' he said. ``Being involved at more levels of distribution should return more profits.''
Outside North America, Itochu operates tire wholesaling ventures in Europe and Asia, but up to now has been active in the U.S. solely as an importer.
Among Itochu International's North American customers is American Car Care Centers Inc., with which Am-Pac/Tire Pros has been and will continue to be affiliated.
Itochu International's general merchandise importing division—which will continue to operate independently of Am-Pac—has been ACCC's exclusive supplier of imported products since 1995, said ACCC President Len Lewin.
In the past, this supply included the Chinese-manufactured Wynstar brand—since discontinued—and in the near future will feature a new, Asian-sourced brand, Guardian, in passenger and light-truck sizes. Itochu's role could be expanded to include products other than tires, should ACCC's product committee so choose, Mr. Lewin said.
The link between Aspen and Itochu dates back more than three years, Mr. Mangola said, after Itochu started supplying products to ACCC members, including Tire Pros stores.
Contact between Mr. Mangola and Steve Euki—Mr. Yanashima's predecessor at Itochu—laid the groundwork for more formal cooperation. Merger/takeover discussions began in earnest about a year ago, Mr. Mangola said, after Mr. Yanashima took over responsibility for general merchandise importing at Itochu International.
Direct involvement by Itochu International Chairman Jay Chai helped seal the deal, Mr. Mangola said.
``Mr. Chai understands U.S. business and the U.S. businessman,'' he said. ``It was key that he insisted that we continue as managers. He feels we can avoid repeating failures of the past.''
The Aspen principals considered other options and suitors, but opted in the end to sell to Itochu because they felt Itochu offered the best chance for expanding Tire Pros, and because they wanted to avoid structured buyouts or other deals that would have tied up too much capital.
Tire Pros caters to small independents, a fact reflected in the make-up of the franchise network: The 85 franchised outlets are owned by 75 franchisees, Mr. Mangola said.
In this case, though, ``small'' refers to the number of outlets, not sales volume, Mr. Mangola said, pointing out that as many as 20 Tire Pros outlets report $200,000 or more a month each in retail sales.
Am-Pac considers itself California's largest wholesaler of products from Michelin Americas Small Tires, Bridgestone/Firestone Inc. and Continental General Tire, and distributes Sumitomo, Ohtsu and Pirelli tires as well. Operating from four warehouses in California, Am-Pac recently added the Dayton brand to its product mix.