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November 08, 2004 01:00 AM

ATD acquisitions shift industry dynamics

Bruce Davis
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    American Tire Distributors (ATD) Inc.'s acquisitions of Big State Tire Supply in April and Target Tire Corp. in September represent measurable shifts in the wholesaling industry's dynamics, but ATD is not the only wholesaler to make news this year.

    ATD's deals will add more than $100 million in annual sales to the ledger, pushing its sales this year to beyond $1.2 billion, or twice the sales volume projected at TBC Corp., ATD's largest independent wholesale rival.

    Both ATD and TBC have reported growth in their wholesale business this year, the result of higher volumes, higher selling prices and product mixes that are more skewed to higher value-added products.

    Buying Lubbock, Texas-based Big State Tire filled a gap ATD had between its distribution centers in Texarkana, Ark., and Phoenix and added more than 2,500 accounts in Texas, Oklahoma and New Mexico to ATD's ledger, as well as the management talents of Big State founders Mel Shook and Jerry Hale.

    ATD's more recent purchase of Target Tire Co. was a case of an opportunity too good to pass up, according to ATD Chairman and CEO Dick Johnson. Jacksonville, N.C.-based Target Tire brought 11 warehouse locations into the ATD fold, although some of them might be consolidated over time.

    Target Tire's 11 warehouses are in Georgia, North and South Carolina, Tennessee and Virginia-states where ATD already operates 26 distribution centers. The 11 centers service approximately 1,800 customers across the five states, as well as portions of Kentucky and West Virginia.

    The deal also led to ATD's becoming an American Car Care Centers (ACCC) Inc. distributor for North and South Carolina, Georgia and southeastern Tennessee.

    ATD now has distribution centers in 38 states supplying nearly 44,000 points of sale.

    For its part, TBC has seen its wholesale revenue increase 9.2 percent through the first nine months of 2004 on the effects of favorable pricing-average wholesale tire prices were up 8.2 percent through six months-sales mix plus cost containment and despite a decline in unit sales. TBC's wholesale business is shored up by its private label program-Multi-Mile, Cordovan, Vanderbilt and Sigma.

    Other growth to note from the past year:

    * Troy, Mich.-based Tire Wholesalers Inc. (TWI) opened a warehouse in Kalamazoo, Mich.-its fourth-that is part of a long-term TWI strategy to expand same-day and next-day deliveries to customers in lower Michigan.

    * U.S. Tire & Exhaust of Combined Locks, Wis., opened a regional distribution center, its seventh, in Cedar Rapids, Iowa, to help it increase market penetration in that area. The company, an ACCC distributor, also has centers in Wisconsin, Minnesota, Illinois and Missouri.

    * Del-Nat Tire Corp. took on two new distributors for its National brand: Southern Tire & Auto in West Palm Beach, Fla., and Kramer Tire Wholesale of Norfolk, Va. In addition, Del-Nat's stockholders elected Dick Erickson, owner of Sun Tire Services Inc. in Jacksonville, Fla., chairman of the board, succeeding Tony Vetter, president of Northwest Tire Inc. in Bismarck, N.D.

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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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