FORT WORTH, Texas (March 24, 2000) — As long as young car enthusiasts desire the sporty looks of performance tires and custom wheels, Rich Hollander is confident he´s got a customer base for Rent-A-Tire Inc.
He hasn´t been proved wrong yet. Since its founding in 1995, Rent-A-Tire has grown from a single store in Fort Worth to having recently opened its 40th outlet in Gretna, La. — which is also its first location outside of Texas.
Rent-A-Tire is a rent-to-own tire chain that caters to customers with poor credit who are looking for stylish tires and wheels, said Mr. Hollander, president of Rent-A-Tire.
The chain hasn´t finished expanding — it currently is opening a store in Oklahoma City and will open one in Phoenix next month.
The premise behind Rent-A-Tire is that customers can rent a set of tires starting at about $14 per week without a credit check or deposit, Mr. Hollander said. Customers are free to return the merchandise at any time with no further charges. The chain also offers a 60-days-same-as-cash program, which seems to draw loyal customers.
"We find that when we go in (an area) and put a store in, there´s just a phenomenal response," said Marketing Director Elisa Weber. "So, obviously, we´re filling a need that´s been out there for a while."
The firm´s typical customers are 18- to 35-year-old males who have annual disposable incomes ranging from $15,000 to $35,000 but can´t afford to buy a set of tires and wheels outright, Mr. Hollander said.
"Though our customers have good jobs, get paid on a regular basis and actually make good money, they don´t have a couple thousand dollars sitting around," he said. "So we help them out."
While Z-rated tires are popular with this enthusiast crowd, they´ll often settle for renting H-rated tires that exhibit a performance "look," Mr. Hollander explained. Customers can pay up to the full extent of the rental agreement and later own the products, but many often return the merchandise to rent a new set.
Rent-A-Tire then either rents out the used tires at the same rate but for a shorter time period, or sells them as used merchandise.
Mr. Hollander declined to discuss the details of rental agreements other than to say rental charges vary according to the price of the tire or wheel and whether they´re rented as a package or separately.
As part of the agreement, customers must visit a Rent-A-Tire store each week to pay, but can receive a coupon to skip a week as long as they later make two consecutive payments, Ms. Weber said. Although she couldn´t provide statistics on the number of repossesions Rent-A-Tire has made, she said that´s usually the last resort, because the company is willing to be flexible within a customer´s budget.
The chain offers only a few brands — Dayton, Toyo and Centennial, and is adding Yokohama — in both passenger and light truck sizes.
New and used tires are sold, but tire sales make up less than 10 percent of Rent-A-Tire´s total revenues, Mr. Hollander said, although he declined to discuss sales figures.
The company also sells tire and wheel cleaners and performs tire balancing and rotation.
Rent-A-Tire is a wholly owned subsidiary of Fort Worth-based Cash America International Inc., a financial services enterprise that acquires and operates pawnshops and also provides check-cashing services.
According to its most recent filings with the Securities and Exchange Commission, Cash America reported total revenues of $267.6 million for the nine months ended Sept. 30, 1999.
The concept began when two men in Big Spring, Texas, founded a company called Tire Time Rentals Inc. and began offering franchises.
That company´s Fort Worth franchise decided to call its location Rent-A-Tire and sold that store and its name to Cash America, Mr. Hollander said.
The two tire rental firms are separate companies presently operating in Texas.
Cash America then went on to build three additional stores during its subsidiary´s first three years in business, before starting its major growth spurt two years ago, he said.
When asked if Cash America would invest in building a national chain of Rent-A-Tire stores, Mr. Hollander said, "I would think so." He noted that the company will soon link all of its stores electronically through a point-of-sale system developed by PriceWaterhouseCoopers.
The system will allow Rent-A-Tire to order inventory from its distributors and for its customers to make payments online.
Rent-A-Tire isn´t finished growing, he said. The firm plans to offer franchises — particularly to tire dealers in cities with populations of 50,000 to 70,000 — and will start marketing that program first to Texas dealers.
Approximately 10 stores — including the Oklahoma City and Phoenix stores — will "probably" be opened this year, but Mr. Hollander said Rent-A-Tire is more interested in slowing down growth this year in order to concentrate on its newest markets.
"When you go from four (outlets) to 40 in two years, you really need to catch your breath for a little bit," he said. &Copy;