When the promise of a new bridge and increased traffic flow failed to materialize for Fred Violette, the tire dealer struggled for more than two decades to keep his store profitable in tiny Boynton Beach, Fla.
But then came a program created by American Tire Distributors Inc. (ATD) called AutoEdge, and Mr. Violette has been reaping huge benefits since he signed on.
``(AutoEdge) actually saved me,'' he told Tire Business. ``This is the biggest single event that's happened to my business in 20 years.''
Mr. Violette admitted his business, V&C Tire and Auto Center Inc., was ``in trouble since day one'' because he had placed his store in a location he thought would benefit from community development. But Boynton Beach-situated between West Palm Beach and Fort Lauderdale, Fla.-remained unchanged, and Mr. Violette soon began to feel the competition from larger chains.
But after an associate from ATD visited with him and area dealers in West Palm Beach a few years ago, Mr. Violette began to take great interest in AutoEdge. He said he realized it would offer him lower credit card fees, competitive insurance rates and buying power equivalent to large dealerships like Tire Kingdom Inc., a huge Florida retail chain known for to-the-bone tire discounting.
``I knew that as a small, independent business owner I had to hook my little red wagon to a bigger engine,'' he said of AutoEdge. His store now does business as Fred & Joe's AutoEdge.
Now numbering 346 dealers, AutoEdge was launched by Charlotte, N.C.-based ATD in November 2000 as a package of services that help dealers compete with mass merchandisers by giving them a number of tools, according to ATD Director of Marketing Jason Shannon. To belong to AutoEdge, a dealer must commit to buying 51 percent of his or her tires from ATD and pay an annual fee of $225. Dealers can purchase products in any brand mix they choose and still be loyal to manufacturer programs such as Michelin North America Inc.'s Alliance and TireStarz operated by Bridgestone/Firestone.
``It's not really a buying group or a separate company,'' Mr. Shannon said of AutoEdge. ``It's really about service programs, and that allows us to connect it to multiple programs like Alliance or the TireStarz program. It really fits like a hand in a glove.''
ATD has negotiated purchasing discounts for AutoEdge dealers from vendors TeleCheck, Valvoline, Staples Office Supplies, NAPA, CarParts, G&K Uniforms, Interstate Batteries and ADP Co., among others. Dealers get common signage, nationwide road hazard and roadside assistance programs and a credit card with an imprint of their company's name, said Donna Zvanut, ATD's AutoEdge coordinator.
Ms. Zvanut said that although many marketing programs already existed when ATD rolled out AutoEdge, the wholesaler believed it could offer dealers a more flexible program and a chance for them to increase their business. She emphasized that AutoEdge isn't just for small independents.
``It's for the independent tire dealer (who) doesn't want to commit to a particular brand or a particular chain,'' she explained.
As part of its benefits, AutoEdge offers TireEdge, an extended tire warranty, and ServiceEdge, a nationwide warranty on service work.
Jeff Willingham, owner of Greenville, Texas-based Discount Wheel and Tire, said that because of ServiceEdge, his customers could go to any AutoEdge dealer if they experience a tire blowout and get the same adjustment and service as his dealership would provide. AutoEdge reimburses dealers for such service.
Mr. Willingham noted that this was one example of how AutoEdge gives him an additional selling advantage at the counter because he can assure patrons their needs will be met elsewhere in the event of an emergency.
For John Gishbaugher, president of Jack's Independent Service Inc. in Darlington, Pa., AutoEdge not only solved delays in his tire supply caused by relying on an out-of-state distributor, but it also has taught him how to market his single-outlet dealership. The program has given his store an identity through signage and point-of-sale materials, as well as advertising support.
``It's not my strong suit,'' he said of business marketing. ``I don't know how to market. I think marketing is the best part (of AutoEdge).''
Originally an American Car Care Centers Inc. dealer, Mr. Gishbaugher said he was reluctant to change marketing groups when a friend in the industry first told him about AutoEdge and urged him to join. But that friend ``pestered me for about a month. I finally got reamed into it. I haven't regretted it ever since.''
Mr. Gishbaugher said that compared with 2002, his profit margins are up 17 percent, and his sales and volumes have increased as well, all of which he credited to AutoEdge. ``It's probably the best thing that ever happened to us,'' he said.
Mr. Violette also attributes sales growth at his dealership to AutoEdge. He's only been part of the program for a year and a half but his sales last year rose to just above $1 million-from $486,000 when he joined AutoEdge. He acknowledged that other influences have affected his dealership-such as new development in his hometown buoyed by the construction of condominiums. He also recently joined TireStarz, but he's convinced he couldn't have survived without AutoEdge.
``We're in a growing town, don't get me wrong, that has played a factor too...(but) because of AutoEdge I was able to hang on,'' he said.
Insurance costs alone have been reduced by AutoEdge's partnership with ADP, Mr. Violette said. He was able to offer health insurance to all nine of his employees after joining AutoEdge as well as reduce his and his wife's medical expenses 75 percent-from $2,000 per month to $563. Rising health care costs nationwide have raised their premiums to $740 per month, and Mr. Violette said without AutoEdge his premium now would be somewhere near $2,200.
``That's really important to me because my wife has multiple sclerosis,'' he said of ADP's lower medical premiums.
Savings from doing business with another vendor contracted with AutoEdge also helped Mr. Violette buy a company truck. He said he earned rebates from purchasing more than $3,500 per month from Carquest, and those rebates essentially are paying off his truck payment.
Currently, ATD is slowly rolling out AutoEdge in the Midwest and West Coast-at about 10-20 dealers per month, Mr. Shannon said, explaining that although ATD wants AutoEdge dealers in every state, the distributor is not seeking a specific number, but the right fit in the right area. He said the program is all about creating a better logistics chain to help dealers compete.``Dealers need the same tools to operate their stores as other larger retailers do,'' Mr. Shannon said. ``Dealers tend to pay more for the same benefit, so we thought that because we built our business on trying to provide them an efficiency that's equal to what tire retailers have, we built our logistics operation to lower inventory costs.''
Mr. Shannon said the program also has helped ATD's bottom line, but declined to discuss details. He did say that by year-end, ATD should have 400 dealers on board based upon the interest expressed in AutoEdge.
``The distinction we think AutoEdge has vs. some of its competitors is helping the dealer lower his operational costs,'' he said. ``The independent owner is truly independent.''