TIJUANA, BAJA CALIFORNIA, Mexico — As someone famous once said: It was the best of times, and the worst of times.
The date was Aug. 5, 1982. It is seared into the memory of Rodrigo Valle Hernandez.
The day was particularly fruitful in two regards: Mr. Valle's first daughter was born on that day. And at the same time, he realized a dream by opening his first tire dealership in Tijuana, a 10,000-sq.-ft. state-of-the-art facility, called Tecnicentro Royal.
- This article appears in the Nov. 9 print edition of Tire Business.
At the same time, he remembers the bad news as if it were yesterday. Political unrest in Mexico caused the peso to be devalued. By nearly half.
"Our president nationalized all the banking systems," he said. "It was very difficult to get dollars because you had to go into the black market."
The cost of his equipment, budgeted at $250,000, would now cost him $500,000. Talk about a punch to the proverbial gut.
"That wasn't considered on my cash flow or anything," Mr. Valle recalled.
Getting product for his dealership proved difficult. He had a choice: Give up almost before he started and close the business, or persevere.
"It would have been easier thinking to just not go through (with) the business and sell the equipment and anything I had, or fight it out," Mr. Valle said. "I took the second one — Fight it out."
After four years — and selling property he had wanted to keep — he had paid off all his debts.
Today, Tijuana-based Grupo Tersa operates more than 150 stores under its signage, as well as three distribution centers, operating in eight Mexican states. The group also owns 13 auto dealerships and a real-estate division. The company has nearly 1,000 employees
The group's sales last year totaled $100 million, $60 million of which came from the tire business.
Mr. Valle's business acumen carries into his philanthropy, operating the Valle Bibb Foundation, which has donated more than $3.5 million to charitable causes in and around his state, a big part of the reason he is this year's recipient of the Tire Business Tire Dealer Humanitarian Award.
"(The devaluation) kind of made me stronger and faster, made me mature faster and made me appreciate the business more, because I had to respond faster than other people," he said. "The consumer wanted to see why and how we were different."
Key decisions
Mr. Valle attributes his success in those early days to three decisions that set his dealership apart from his competition.
The first, he said, was to pair a woman and man to work together as salespeople.
At that time, he said, no females were on the floor selling products. The thinking was this: Tires and automotive service were men's work, and the overwhelming majority of customers were men.
But Mr. Valle said he believed data showed otherwise. As many as half of the customers purchasing vehicles, tires and service were women. He wanted his business to reflect that.
"We treated (all customers) like royalty," he recalled. "We started getting women coming into the shop. We started having competitors looking at us."
Competitors were a little more than irate, he said, when he opened his shop during the lunchtime period. Back then, it was standard practice to close for 90 minutes.
His hours allowed customers to drop off their cars before work and pick it up during their lunch break.
Some of his fellow dealers called to pressure him to rethink that policy. He didn't blink. They later took him to breakfast and threatened him. To no avail.
"I said, 'I'm not going to close for lunch because my hourly schedule wasn't for us: It was for customers,' " he said.
In addition, his shop remained opened 12 hours a day (7 a.m. to 7 p.m.), seven days a week.
"I said it was anyone's decision whether or not to close, and we never closed," Mr. Valle said. "All my competitors started opening for lunch, and so did car dealerships. We broke a tradition because at that time it was not the customers' convenience; it was the dealers' convenience. I had a different mentality, at 25 years old."
The third decision he made dealt with expenses: Spare none.
That started with the construction of his store. He would visit several other dealerships for ideas in assembling the amenities his shop would offer, including a small cafeteria and a waiting area with a television.
Even his decision where to build played a part: He picked a very expensive, sought-after location in Tijuana, not far from a country club.
"The construction on our first store was very high-class, inside, outside," he said.
And he bought the latest, most advanced shop equipment, including an electronic alignment machine.
"All the tire shops (were) buying used equipment because it was cheaper," he said. "I had nice floors, wood parquet. They told me I was crazy, but I wanted to make a big difference."
Car dealerships would take their vehicles to his shop to get their tires balanced and aligned because of his equipment, he said.
He eventually sold the equipment to other area shops, always purchasing more technologically advanced equipment.
He said his shop — which remains in operation at that same location 36-plus years later, doing $1.3 million in sales annually — began to get noticed. His customers began recommending it to others.
"The only way I knew how to survive," he said, "was to be different."
Still, he was considered an associate dealer: the shop sold only Uniroyal- and BFGoodrich-branded tires, purchased from another dealer rather than directly from the manufacturer.
Nine years after opening his shop, a seminal moment occurred: Michelin selected his dealership to be the tire company's exclusive distributor for Tijuana and Ensenada.
It was a natural fit since Mr. Valle's dealership had sold two brands that the French tire maker had acquired recently.
"The sun started to shine a little bit in 1987 or so," he said, "but I can't really say I had full sun until 1991, when Michelin came into Mexico. Michelin came in very strong, with excellent, excellent programs. That's when everything changed for me for the good, for the best."
Business took off, prompting Mr. Valle to open another store in Tijuana and one in nearby Ensenada and Rosarito.
He kept up that aggressive pace, using the same successful strategy, except now he had Michelin behind him.
He opened it latest store late last year. His original store still stands; it has grown from six bays to nine.
Today, he sells the three Michelin brands, along with Cooper and Toyo. He also sells two lower-tier Chinese-made brands, HiFly and a Grupo Tersa-branded product.
He said 80% of his sales come from first-, second- and third-tier tires.
"We're one of the most advanced companies in Mexico, regarding all the social (media) and the way we are doing service is by using digital," he said.
