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Q&A with Bud Luppino

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Tire Business contacted several dealers to see how they fared in 2015 and what they anticipate for the New Year. The following are edited versions of those interviews.

Q: Generally speaking, how would you say business fared for you in 2015?

A: “This year has been good. Our sales are up about 18 percent over last year. We're real happy with the results. Profits are up about 21 percent.”

Q: What would you attribute that to?

A: “I think a lot of it has to do with our mix. Tire (sales) were a little soft this year, and our service business has really picked up a lot. Most of the profit was derived from the service business.

“Our new store (opened in 2014), that thing just keeps on growing like a weed. Our car count there is phenomenal. It's over 1,000 cars a month in that place. I think the fact that being in our second year in business, people became more familiar with the facility. We're continuing to take care of the customers the way they need to be taken care of, and as a result they just keep bringing their cars back.

“Overall, I'm not disappointed with where we are this year. The economy has a lot to do with it. It's still pretty soft. As much as people like to think it's doing well, there are still a lot of soft spots in the market and, of course, there are a lot of competitors. Margins on tires have dropped phenomenally over the last six or seven months. There's probably been more retreat in margins over the last six or eight months than I've seen in probably the last five years....

“New car sales are going through the roof...and so the replacement tire business is down because everybody's buying new cars. The 13 million cars that they sold this year, those could've been tires—50 million tires—in the aftermarket that aren't being sold.”

Q: How are you compensating for that? By doing more automotive service?

A: “Everybody is doing more service business. Half the advertising is directed just to services. It used to be that 70 percent of the advertising in our business was tire-related, but now at least half of our business is service related. Our mix as a company used to be about 65/35 tires to service, and now we're at 60/40.”

Q: Do you see that shifting further?

A: You're asking a tire guy the wrong question. I would hope that (units) continue to grow, and our objective is to grow our units. I think that if we can see some growth of 3 percent in 2016 I'd probably be satisfied with that.”

Q: What are your overall expectations heading into 2016?

A: “All indications are that business will continue to be like this over the next 10 to 12 months, so I'm cautiously optimistic. I think we're probably going to grow the business about 5 percent over inflation. If we do that, we'll be OK. Anything over that and I'd be real happy.”

Q: Are you considering any expansion opportunities or new equipment in the coming year?

A: “We're looking at some new equipment, new Hunter equipment. They're our primary supplier of equipment. Some of the new stuff they have, we're looking at that. We may upgrade one of the store's alignment machines. Anything we do is really going to be driven—because our tire equipment is brand new—more by the service area. Speed and traffic.”

Q: What about employee training? Are you planning to invest in that in 2016?

A: “Yes. We are looking to utilize the Michelin Alliance training programs they have available to us through ATD (American Tire Distributors Holdings Inc.). We'll be sending our salesmen and managers to that training throughout the year. We're a member of TIA (Tire Industry Association), so we'll be doing some training through them. Also, Tire Pros has a big library of training materials available to us online.”

Q: What challenges and competitive pressures do you believe will have the biggest impact on your business this year?

A: “The biggest challenge is people. This is not a glamorous business. Nobody wants to do what we do. And I don't mean this in a bad way, but you know, this is a dirty job. It's not very glamorous, you know?

“People tend to gravitate away from this type of concept because the money they're expecting they don't expect to make that kind of money here. So there's a lot of high-quality, highly trained people that might not be interested in coming into our business because they don't see this as a pretty business....

“If you have any sort of skill set in this business you can make serious money. A really top-notch salesman can be making $60,000 to $70,000 a year to start at our new location.”

Q: Anything else you want to add?

A: “Regulatory problems between the state and the federal government are driving us nuts.”

Q: What specifically?

A: “In our state it's mandatory that every employee, whether you're full time or part time, gets three days of sick leave. There's no excuses, no exceptions—everyone gets it. When you're talking about 40 or so employees, that's 120 days sick leave that after you pay that comes straight out of the profits of the business.

“And it's not a bad deal, but you know, when the margins are as thin as they are you're taking that much money out of our pocket. It's got to come from somewhere.”

Q: What are your thoughts on tire registration?

A: “There's another issue I was hoping that would go away—but it didn't. That will be another issue we'll have to start with in January. I think we're probably going to use a service provider that can do that sort of thing for us. I just don't see us being able to take the time to do it ourselves.”

To reach this reporter: wschertz@ crain.com; 330-865-6148; Twitter: @Will_Schertz

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TB Reader Poll

Previous | Published February 1, 2019

What issue concerns you most heading into 2019?

The threat of more tariffs.
27% (27 votes)
The new Congress in Washington.
35% (35 votes)
Price fluctuations for the products we sell.
10% (10 votes)
More disruptions across the industry.
29% (29 votes)
Total votes: 101
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