TROY, Mich.—After several years of contraction and consolidation, Penske Auto Centers L.L.C. intends to grow again, planning to open three new stores this year and 30 to 40 in 2002, according to Jim Wheat, president and CEO. Some of the new stores could be stand-alone locations.
Penske Auto Centers, considered the largest independent tire dealership in the U.S. with 630 locations, also announced it will upgrade its alignment services in the coming years, signing a five-year, multi-million-dollar supply agreement with Snap-on Inc. The deal covers the latest John Bean V3D alignment systems and other tire balancing and changing equipment.
Penske Auto plans to open one new store each in Florida, Michigan and Ohio before year-end, a company spokeswoman said. Starting next year, the company will consider stand-alone store sites along with the more traditional practice of co-locating on Kmart Corp. properties. The company declined to comment on locations for the new stores to be opened next year.
From a high of 860 stores in 1995 when Penske agreed to take over Kmart's automotive service business, Penske has either closed underperforming stores or been forced to give up some stores because Kmart closed some locations where the auto centers were attached.
“Our business strategy includes the opening of three new state-of-the-art service centers by the end of 2001 and the opening of 30-40 new centers in 2002,” Mr. Wheat said in a prepared statement. “And that's just the beginning. Our leadership has set aggressive goals for our company, and I'm confident that we'll meet, if not exceed, each of them."
Earlier this year, Kmart extended its agreement with Penske covering the operation of the auto service centers located at 630 Kmart stores nationwide. That 10-year agreement extension coincided with a recapitalization for Penske Auto Centers that saw Kmart assume a minority ownership stake in the Penske Corp. subsidiary.
For its part, Kmart planned to open 30 Big Kmart stores and 20 Super Kmarts this year, with even more stores planned for 2002, according to the company.
Regarding the John Bean agreement, Mr. Wheat said: “This supply and purchase agreement reinforces our company's commitment to maintaining our position as a leader of preventative automotive services nationwide. As we continue to meet our customers' expectations, it is equally important that we provide and equip our centers with state-of-the-art technology in order to better service our customers' vehicles.”
Neither Penske nor Snap-on commented on the value of the agreement, which also covers Virtual Plane Imaging System II wheel balancers and Enhanced High Performance tire changers. A V3D alignment system lists for between $25,000 and $29,000, according to Snap-on, depending on the application. The V3D offers faster and more accurate alignments than “traditional” alignment systems, Snap-on claims.
The new deal is an extension of an earlier five-year agreement.
Penske also announced four key executive appointments:
*Scott Moss to chief administrative officer and senior vice president of human resources, responsible for human resources, training, safety and risk management.
* Peter Klein to chief operating officer and senior vice president of stores, responsible for operations, stores and merchandise purchase and replenishment, along with purchasing, inventory control systems and management of fleet sales.
* J. Randall Lawrence to chief financial officer and senior vice president of finance, responsible for ensuring the integrity of financial controls and information systems.
* William McStay to chief marketing officer and senior vice president, marketing and communications, responsible for enhancing the company's brand identity and equity in the marketplace, developing advertising, marketing and public relations programs.
Penske Auto Centers sell Goodyear, Dunlop and Penske-brand tires and also offer 30-minute oil changes, wheel alignments, ATF fluid exchanges and brake service, etc.
Penske operates stores in 45 states, but its core strength is in the Midwest/Great Lakes region, where nearly 40 percent of its stores are located, said Penske's Web site.