LEESBURG, Va. (Jan. 12, 2004) — About 340 Precision Tune Auto Care franchise auto repair facilities soon will have the option of selling tires through national distribution arrangements with Pep Boys—Manny, Moe & Jack and Tire Kingdom Inc.
Precision Tune Auto Care (PTAC) facilities, operating under parent Precision Auto Care Inc., include about 340 facilities in the U.S. and about 105 internationally. John Wiegand, senior vice president of operational programs, said the company expects about 50 percent of its U.S. franchisees to be offering tire services over the next 12 to 18 months.
The domestic stores are in various regions, including in the Southeast, Mid-Atlantic, Florida, Massachusetts, Texas and Arkansas markets and the metro Detroit, Minneapolis, San Diego, San Francisco and Seattle areas. The company wants to have 600 domestic stores within five years.
Russ Bock, owner of a PTAC outlet in Billerica, Mass., said alignments and tire sales together make up about 10 percent of his sales since he added both in July 2002 as part of a pilot program with a local distributor. He said the two have potential to be 20-25 percent of his business.
But Mr. Wiegand said the tire program is aimed at providing an additional service to PTAC's some 40,000 weekly customers plus spurring other related service work. Precision Tune hopes to be a one-stop automotive service provider—not a tire dealer, he said, although its franchisees essentially would compete with all aftermarket installers.
“This is an additional service, a convenience for our customers, more than it is a concerted effort to go out there and be one of the leading tire (dealers),” said Robert Falconi, president of Leesburg-based Precision Tune.
Mr. Wiegand added the company is not looking to join the fray of intense competition between independent dealers and the likes of Wal-Mart Stores Inc. and Costco Wholesale Corp.
“We're not using tires to drive traffic at a price point level,” he said. “That's not a market we want to compete in.”
Mr. Wiegand said Precision inked deals with Pep Boys and TBC Corp.'s Tire Kingdom subsidiary as part of its “hot shot” program—deals aimed at same-day delivery since most of Precision Tune's facilities don't have room to stock tires.
The program, which includes other suppliers such as AutoZone Inc., matches up a PTAC store with, for example, a Pep Boys or Tire Kingdom outlet. The PTAC store then has access to whatever the supplier store stocks. About half of PTAC's locations match up with a Pep Boys outlet that is five to 10 miles away, Mr. Wiegand said. Pep Boys operates 595 stores in 36 states and Puerto Rico.
“Our franchisees really have a wide variety of options on who they want to work with on the hot shot programs,” he said.
The Pep Boys deal gives PTAC facilities access to the automotive service chain's Futura private brand, and PTAC stores also can buy flag brand tires through Pep Boys once that chain adds them to its own stores. Pep Boys officials have not said which major brands will be involved or when the program will be enacted.
A Pep Boys spokesman said the alliance will help enhance sales of parts and tires. He said some PTAC stores already had bought tires from local Pep Boys stores through individual arrangements, but the national program should add about 150 to 200 PTAC locations to Pep Boys' business.
Mr. Wiegand said the Tire Kingdom deal works much like the Pep Boys arrangement, where PTAC facilities can work with nearby Tire Kingdom, Merchants Inc. or National Tire & Battery (NTB) outlets, which all are part of the Tire Kingdom subsidiary. With the addition of NTB, Tire Kingdom now operates more than 590 stores.
The Tire Kingdom deal also gives PTAC outlets immediate access to name brands such as Michelin, Pirelli and others, depending on what is carried by the local store. Mr. Wiegand said PTAC facilities also would have access to a Tire Kingdom private label. Mr. Wiegand said the availability of various brands is important so that the PTAC stores can offer economy, mid-level and performance tires.
“When you have choices at the franchise level, they can provide choices for our customers, which we know is very important,” he said.
Tire Kingdom President Orland Wolford could not be reached for comment.
In addition to Sigma, TBC also markets the Cordovan, Multi-Mile and Vanderbilt private labels and Goodyear's Fulda associate brand.
Mr. Bock said he's anxious to sign on to the Pep Boys alliance because it can offer entry-level tires. So far his store had carried only mid-level and performance tires.
“They might enable us to break into that market, which will make our advertising that much more appealing to customers,” he said.
The whole program is part of Precision Tune's plan to expand its tire business with a focus on increasing revenue, customer retention and other service work.
Mr. Bock said not only has tire and alignment revenue grown, but customers also are more receptive to other repairs since he added tires.
“It seems like it's easier for the customer to say, 'OK, why don't you do all of that while it's here,'” he said, adding his ticket average has gone up significantly on his average volume of 240-250 cars per week.
He has marketed tires with point-of-sale displays as well as announcements and promotions in his direct mail program, which involves about 2.5 million pieces of mail a year.
But Mr. Bock still is considering how he wants to market the tire program going forward, especially since he wants to remain an automotive service shop that also offers tires.
“I'm trying to find where my niche is in the marketplace,” he said.
Mr. Wiegand said profitability will be a key issue for other PTAC stores considering offering tires.
“You can't add a product line to your business that has an average cost of goods of 50-55 percent, so we want to make sure they're profitable first,” he told Tire Business. “What we do know is true is they're a good retention tool for our centers. We also realize it also leads to other services such as front end work.”
After completing a financial turnaround of the company recently, Mr. Falconi said Precision's tire program expansion as well as the planned franchise expansion are some of the first major undertakings of the now-healthy company.
“We got the company fixed, and that's why we're able to start these new programs,” he said.