AKRON (March 29, 2000)—Considering the steady and healthy growth of trucking in the past few years, it should come as no surprise that North America´s leading commercial tire dealerships are growing steadily as well.
The same can´t necessarily be said about their profits, though. Three out of five companies responding to this year´s survey mentioned eroding margins as one of their primary concerns for the coming years.
Collectively, the 35 dealerships in this year´s ranking reported 5.3-percent higher sales than in 1998. Eleven of the 35 experienced double-digit growth over 1998, while four suffered sales declines, primarily because of retrenching or reorganizing made necessary by a shift in retreading system suppliers.
Most of the dealers concerned about margins blamed the battle for market share among the four major players—Bandag Inc., Bridgestone/Firestone Inc., Goodyear and Michelin North America Inc.
The Commmerce Deparment´s producer price index shows the manufacturer selling prices for truck tires at year-end were down about 2 percent from year-end 1998.
Overall, trucking enjoyed a banner year in 1999, with tonnage shipped by trucks up 6.2 percent after 10-percent growth the year before. Sales of heavy-duty new trucks were up 25.3 percent.
The new-tire industry benefited as well, shipping 7.2 percent more new truck tires to the replacement market and 14.9 percent more to the vehicle makers for original equipment fitment, according to Rubber Manufacturers Association figures.
The domestic new-tire industry failed to keep pace with demand for the second straight year, however, producing only 4.4 percent more medium truck tires than in 1998.
Imports, on the other hand, shot up 29 percent, and now account for roughly half of U.S. OE and aftermarket shipments. So-called "captive" imports by the major U.S. makers from their overseas affiliates account for a considerable share of imports, but shipments from China and South Korea, in particular, have been rising dramatically as well.
Production of medium truck tire retreads actually declined slightly last year from 1998, according to International Tire and Rubber Association figures. A considerable share of the decline was in intermodal tires, as prices of certain imported new tires fell to a level that made retreads uneconomical, ITRA Executive Director Marvin Bozarth said.
The largest single change to this year´s ranking of independent commercial dealerships was the disappearance of perennial league leader Tire Centers Inc., now a wholly owned subsidiary of Michelin.
As expected, Treadco Inc. claimed the top spot on this year´s ranking of leading independent commercial dealerships, with sales of $186.6 million. Les Schwab Tire Centers, however, leapfrogged over Kal Tire into second place and narrowed the gap between itself and Treadco with 12.5-percent growth over 1998, to $169.8 million.
The "climbers" of the year were: McCarthy Tire Service Co. Inc., sales up 31.9 percent to boost the company seven spots to 13th; Bob Sumerel Tire Co., up five slots to 15th on 18.4-percent better sales; Parkhouse Tire Inc., up three spots to fifth on 14.1-percent growth; and Cross-Midwest Tire, sales up 31 percent and ranking up two spots to eighth.
In each case, acquisitions from the latter half of 1998 through 1999 contributed to growth.
In addition to the companies ranked, there are at least two other truck tire distribution networks that bear consideration—Travelcenters of America Inc. and Premier Fleet Services.
With 160 truck stops across the U.S., Travelcenters of America sells an estimated 250,000 truck tires a year—worth at least $65 million to $75 million—and is considered the largest distributor of Bridgestone- and Firestone-brand truck tires in the country.
Premier Fleet Services is the commercial distributor network affiliated with Premier Bandag and Indiana´s Zurcher Group. The 19 individual distributorships listed by Premier Fleet operate 24 commercial tire stores.
Altogether, the 35 dealerships in this year´s ranking operated 859 outlets and accounted for $2 billion in sales of tires, wheels, retreads and related service.
By comparison, the four manufacturer-controlled distribution chains operated 585 outlets and took in an estimated $1.9 billion in sales. If Goodyear´s minority-ownership partnership deals in Canada are considered, the totals grow by more than 90 outlets and nearly $100 million in sales.
On average, independent dealerships average $2.3 million per outlet, with a range of about $750,000 to nearly $9 million a store. If combination retail/commercial outlets are discounted, the store average is closer to $4 million, the data show.
The leading dealerships operate an average of 4.1 service trucks per outlet, ranging from a low of 3.3 to a high of 12 per store.
Among brands, Bridgestone was the most prevalent, listed by 27 of the 35 dealerships in this year´s ranking, followed by: Michelin with 26; Firestone, 21; BFGoodrich and General, 15 each; Yokohama, 14; Goodyear, 10; Continental and Dunlop, eight each; Kelly-Springfield and Toyo, seven each; and Kumho, six.
All 35 of the ranked companies are retreaders as well. Twenty of the 35 currently are Bandag franchisees, and five others were Bandag franchisees at least part of 1999 before switching to Michelin Retread Technologies Inc. The conversions bring to seven the number of MRTI retreaders now among the top commercial dealerships.
Four dealers are Goodyear retreaders, while three list Oliver and/or Long Mile as their primary retread system source. In addition, three dealers list Hawkinson as a secondary source, while Hercules and Marangoni are listed by two each.
Among major moves of the past year by leading commercial dealerships:
*Flamborough, Ontario´s Beverly Group Ltd. boosted sales nearly 60 percent during 1999 as it expanded its network of stores and entered into retreading for the first time.
*Fountain Tire laid the foundation for growth this year in January by acquiring a dozen Goodyear commercial outlets and a retread plant in Manitoba and Ontario.
*McGriff Treading Co. Inc. opened commercial outlets in Tupelo, Miss., and Memphis, Tenn., but saw sales slip 7.5 percent as retread production and sales declined.
*Pete´s Tire Barns Inc. of Orange, Mass., opened commercial outlets in Hartford, Conn., and White River Junction, Vt., which contributed to 31.8-percent growth over 1998. During 1998, the company added three outlets and a retread plant via acquisition.
*Raben Tire Co. Inc. of Evansville, Ind., acquired commercial sites in Bedford and Washington, Ind., and has plans to add three more this spring—most likely via acquisition.
*Service Tire Truck Centers of Bethlehem, Pa., acquired Monaghan Tire—two retread plants—during 1999 and is building a combination commercial center/retread plant in Vineland, N.J.
*Snider Tire Inc. of Greensboro, N.C., added stores in Charlotte and Wilson, N.C., and in Atlanta, and is anticipating a double-digit increase in business this year to $75 million.
*White Tire Distributors Inc. showed a net gain of three stores, selling its Nashville, Tenn., location to TDS and opening new outlets in Charlottesville, Newport News and Norfolk, Va., and Spartanburg, S.C. &Copy;