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October 23, 2000 02:00 AM

Penske still tops; Morgan gaining

Bruce Davis
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    Cartographers charting the North American tire retailing landscape the past few years have used up plenty of erasers—and the pace of change is not likely to ease up anytime soon.

    Morgan Tire & Auto Inc., by virtue of its acquisition of Tires Plus in July and other smaller purchases, has advanced to No. 2 among independent dealerships with 545 locations—483 company stores and 62 franchised outlets—and projected 2000 sales of $725 million.

    By early next year at the latest, all of Morgan Tire's outlets will be trading under the name Tires Plus Total Car Care, adopted to unite the six major retail chains operating under Morgan Tire CEO Larry Morgan's control.

    To figure out what Morgan Tire's stores currently operate as, you need a score card: They're Olson Tire Total Car Care in the Southeast, Hibdon Tire Centers in Oklahoma, Michel Tire in the Ohio River Valley and Florida, Avellino's in and around Philadelphia, Wheel Works in California, and Tires Plus in the upper Midwest.

    Following Morgan Tire's takeover of Minneapolis-based Tires Plus in July, it was decided the Tires Plus name was the one the group would use as its unifying element in the marketplace.

    Morgan Tire is not done growing, though. The company has at least 20 new stores under construction, 30 more on the drawing board and about 50 more properties beyond that waiting for development, a spokesman said, laying the foundation for a network of 600 to 650 stores by this time next year.

    The company's Web site already promotes itself as America's largest tire dealer, with a network "approaching 600 stores."

    All told, Mr. Morgan now oversees an enterprise with more than 6,000 employees and expected 2000 sales of $725 million. Longer term, he sees Tires Plus Total Car Care exceeding 1,000 stores and $1 billion in revenue by 2004; growth opportunities are seen in the Northwest and Southwest.

    Heir to the throne?

    With its acquisition earlier this year of Florida's 148-store Tire Kingdom dealership, TBC Corp. could make a claim to be considered North America's largest independent tire distribution group, with nearly 650 retail outlets. That tally includes close to 500 Big O stores in addition to the Tire Kingdom sites—and more than $700 million in wholesale business.

    At this point, Tire Kingdom and Big O are treated as separate, autonomous operations. Big O's business direction, however, is changing slightly, with more company-owned stores on the horizon.

    Currently, TBC/Big O own 11 Big O stores outright and are 50-50 partners in 11 more. The company anticipates opening about 10 more corporate-owned outlets in the coming 12 months, principally in Indiana and Ohio. If reported together as one, the Big O franchised network would have sales of more than $500 million, based on reliable estimates.

    No `blue light' specials

    Penske Auto Centers, the largest chain in North America based on company-owned outlets, may see its No. 1 status challenged in next year's ranking. Penske's 645-store count is down again this year—the third year in a row—and the company faces additional closings in the near future as 20 of 72 Kmart Corp. stores slated for closing this year have Penske Auto Centers on site.

    Of the 20, six are stand-alone auto centers that Penske plans to keep open, but the future of the other 14 is yet to be determined. On the other hand, Penske has finished refurbishing nearly all its stand-alone auto centers.

    If Morgan Tire's growth plans stay on schedule, it would be approaching 650 stores by late next year, putting it close to if not beyond Penske's total. On a dollar sales volume basis, Morgan—and at least two others—are ahead of Penske, according to reliable estimates.

    Morgan Tire's purchase of Tom Gegax's Tires Plus outfit left an opening among the prestigious Top 10 dealers, a spot filled by Bound Brook, N.J.'s Somerset Tire Service Inc. after opening seven stores in the past year to reach 73. (STS's growth plans for 2001 are outlined on page 28.)

    Outside of the well-publicized major acquisitions in the past year—Morgan Tire/Tires Plus, Heafner Group/T.O. Haas etc.—Discount Tire was the most active of the group, opening 30 new stores in the past 12 months.

    The company, No. 1 among independent tire dealerships in sales with $1.1 billion in retail revenue last year, has similar plans for the coming year—30 to 50 new stores a year—but declined to discuss details as to where it may be looking to open them. Its newest territory is the Carolinas.

    Key word: `Growth'

    Other growing companies of note:

    Belle Tire Distributors—added 13 stores since last year, 12 in one go with the takeover of a dozen closed National Tire & Battery stores in the Detroit metropolitan area;

    Fountain Tire—added 14 stores;

    Mavis Discount Tire—added six stores in the suburban New York City area to its previous network of 32.

    Mr. Tire Inc.—added six stores;

    Vespia Tire Centers—grew by four stores in southern New Jersey.

    Regarding plans for the coming year:

    Ampac Tire Distributors Inc., franchisor of the Tire Pros name/program and a member of the American Car Care Centers (ACCC) Inc. marketing group, has its sights set on adding 100 new outlets to the Tire Pros network, primarily in areas where the company already is active—California, Alabama and Arkansas. There currently are 168 Tire Pros outlets, all but 12 of them franchised.

    Big 10 Tire Stores Inc. plans to expand its network of 75 stores by about five to 10 stores a year, while broadening its scope of operations in the Southeast beyond Alabama, Georgia and Florida, according to the company's Web site. Big 10 Tires of Mississippi, which has 10 stores, operates under separate management and has started converting some of its stores to the Goodyear Gemini program.

    Colony Tire Corp. plans to add four new stores in North Carolina, expanding its network of 23 retail and retail/commercial stores;

    Mountain View Group, owner of Mountain View Tire in the Los Angeles metro area and Superior Tire in Las Vegas, anticipates adding two to four stores in each operating area in the coming year.

    Overall, the "Tire Business 75" count 5,850 outlets—company owned, franchised, affiliated, etc.—among themselves, a net gain of 439 stores over the 1999 total, which in turn was 515 better than in 1998.

    Among buying groups and marketing cooperatives in North America, six of this year's top dealerships are affiliated with ACCC, comprising 284 outlets, while 10 dealerships controlling more than 1,200 outlets are affiliated with Tire Alliance Groupe.

    Name that brand

    >From a tire manufacturers perspective, 17 of the 75 dealerships profiled in this year's rankings are Goodyear G-110, G3 or otherwise directly linked to Goodyear; these 17 operate 1,383 outlets. By contrast, only six dealerships, with 538 outlets, list Bridgestone/Firestone Inc. affiliation, while six others, with 140 outlets, list Michelin Americas Small Tires affiliation. In some cases, dealerships may list more than one affiliation.

    Perhaps more revealing, 42 of the 65 dealerships ranked by total retail outlets (see table on page XX) listed Goodyear as one of their brands. These 42 dealerships operate 3,689 outlets.

    The second most prevalent brand mentioned was Michelin, carried by 37 dealerships at 3,692 outlets. Michelin's BFGoodrich brand was next, carried by 31 dealerships at 3,598 outlets.

    The other brands, and their respective representation, are: Firestone, 28 dealerships, 2,531 outlets; Dunlop, 27 dealerships, 2,752 outlets; Uniroyal, 26 dealerships, 2,579 outlets; General Tire, 25 dealerships, 2,481; Bridgestone, 22 dealershps, 2,088 outlets; Kelly-Springfield and Continental, 21 dealerships each, 2,107 and 2,211 outlets, respectively;

    Four dealerships on last year's list fell by the wayside, three by acquisition—Team Tires Plus bought by Morgan Tire; and T.O. Haas Tire and Tri-Valley/Dormans bought by Heafner—and Tire Town Stores Inc., a two-dealership partnership which dissolved their relationship.

    New to the list this year are: Rent-a-Tire, with 44 tire leasing stores in Texas; Express Tire, with 21 stores in the San Diego area; and David Early Tire, with 15 stores in Nevada.

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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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