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Published on April 16, 2002

Size no panacea in tire business



AKRON, Ohio (April 16 2002)-The swift demise of Penske Auto Centers Inc. underscores a reality of the tire business: Even the big guys can falter.

Two months ago it was California's largest independent tire retailer, Winston Tire Co., seeking Chapter 11 bankruptcy protection while it reorganizes.

That chain, which corporate turnaround specialist Performance Management Inc. bought from Heafner Tire Group last May, had been struggling for years, despite operating more than 100 stores in car-crazy Southern California.

Now Penske has fallen. Its 562 outlets have all been closed and its 4,000 employees are looking for jobs. Clearly, size alone isn't necessarily an advantage in the retail tire marketplace.

Ross Kogel, executive vice president of the Tire Association of North America, said the demise of Penske Auto Centers illustrates that small, independent dealers can survive in the face of competition from regional and nationwide chains such as Penske, Pep Boys and others.

“The tire industry is an incredibly competitive market,” he said. “I am never surprised when service-based companies win out over price-based companies, because it's a market strategy that wins.”

We're not surprised, either. We've said it before, and we'll say it again: It's the personalized, professional, whatever-it-takes service, knowledge and expertise that differentiates a dealership, big, small or medium-sized, from the pretenders to the throne. Gimmicks and rock-bottom prices may sell some tires and services in the short run, but they are a no-win strategy in the long term, unless coupled with first-rate service.

Unless you can look your customers in the eye and give them a reason to return in the future, you may be joining Penske as an industry afterthought.


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