AKRON—As a group, independent tire dealers had a pretty good year in 1999, and most are expecting that good fortune to continue into the next millennium, according to a year-end Tire Business survey. A majority of the 29 respondents to a November dealer survey indicated that sales and profits from both tires and automotive service rose in 1999, compared with 1998 results.
Favorable economic conditions no doubt contributed to dealers' business success, as only about one in 10 reported a downturn in the economic climate in his dealership's market area.
The remainder were about evenly divided between those reporting an improved local economy and those who found no change from 1998.
About six in 10 of the respondents reported increases in their tires sales ranging from 1 to 20 percent, with an average of about 8.3 percent.
Half as many dealers—about three in 10—reported tire sales decreases of 5 to 10 percent, with the average also at 8.3 percent. The remainder reported no change.
In terms of the profits derived from tire sales, increases were again reported by nearly 60 percent of the respondents, ranging from 0.7 to 20 percent with an average of 5.4 percent.
Only one in 10 reported a decrease in profits from tires, with an average drop of less than 1 percent—leaving about a third of the dealers reporting no change.
Two-thirds of those surveyed agreed that fill rates were a problem in 1999: They couldn't get the tires they wanted when they wanted them.
While nearly all the major brands were mentioned as contributing to the problem, the "big three"—Goodyear (including Kelly-Springfield), Bridgestone/Firestone and Michelin—were cited most frequently.
On the service side of the business, about half the respondents reported sales increases ranging from 3 to 20 percent, with an average increase of 12.1 percent.
About three in 10 reported decreases in service sales of 1 to 15 percent, with an average drop of 8.8 percent. The remaining 20 percent or so reported no change.
Profits from vehicle service rose for 60 percent of the respondents by an average of 7.8 percent, with a range of improvement from 0.5 to 20 percent.
Only 12 percent reported a decline in service profits, averaging 1.7 percent. The remainder—about 28 percent—reported no change.
Looking ahead to 2000, dealers generally expected to fare better—and at least no worse—than they did in 1999. Very few dealers—no more than one in 10—indicated they expected either sales or profits to dip in the new year.
Fully 96 percent of the survey respondents expected tire sales in 2000 to meet or exceed 1999 levels, with the majority—71 percent—expecting an increase.
They were a bit less rosy concerning their outlook on profits from tire sales.
Almost 90 percent expected tire-derived profits to meet or exceed 1999 levels, but about as many predicted no change in profits as forecast an increase.
For vehicle service, dealers expressed similar projections for both sales and profits: About six in 10 foresaw an increase, three in 10 saw no change and one expected a decrease.
When asked about their most pressing concerns for the coming year, dealer's responses fell mainly into four areas:
Improving some aspect of their own business operation/performance.
Personnel issues—especially finding, training and retaining good employees.
Pricing—being able to purchase tires and parts at prices that will keep them cost-competitive.
Competition—from a variety of sources, including discounters, mass merchandisers and mail-order/Internet companies.