Retail tire industry shows growth in 2021

AKRON — After much of the tire retail and automotive service industry hit the "pause button" a year ago in terms of business expansion plans, the industry's major players have been back full-bore throughout most of 2021.

With the automotive service industry solidly entrenched as an "essential industry," industry players large and small have rebooted expansion plans, with 38 of the 100 leading retail tire dealerships ranked by Tire Business increasing the size of their store networks in the past 12 months, mostly by acquisition but also to a measurable degree by greenfield expansion.

Topping the growth table was Mavis Discount Tire, which boosted its store network by more than 180 stores, including the merger/integration of Town Fair Tire's 100 stores in New England to the company's tally of 949 stores.

The Millville, N.Y.-based company — ownership of which changed throughout the year to a new private-equity firm — also reaches the market through a network of nearly 300 franchised stores under the Express Oil/Tire Engineers brand.

Heading the Top 100 list for a second straight year is Monro Inc., which added 37 stores in two acquisitions, yielding a network of 1,290 company-owned stores, which go to market under a half-dozen brand names.

Monro also owns the Car-X Tire brand, which has 90-plus franchised locations.

No. 2 is Reinalt-Thomas Corp. — d.b.a. Discount Tire and America's Tire — with 1,113 stores, up 40 from a year ago. Reinalt-Thomas is the clear No. 1 in terms of revenue, however, with sales of $5.2 billion.

Mavis ranks third, ahead of Icahn Automotive (943 Pep Boys stores), TBC Corp. (619 NTB and Tire Kingdom stores) and Les Schwab Tire Centers (461 company-owned stores).

Other major movers in the past year include:

• Sun Auto Tire & Service Inc. (formerly GB Automotive), which added 39 stores by acquisition to grow to 213 locations and a No. 8 ranking.
• Tire Discounters Inc., which opened 15 stores throughout its six-state business footprint to expand to 150, solidifying its No. 10 ranking.
• Heartland Tire, which acquired eight stores in Iowa and Minnesota from Graham Tire Co. to grow to 26 stores and a No. 43 ranking.
• Gill's Point S Tire, which grew by five locations to 32 stores overall, and a No. 35 ranking.

Besides Town Fair Tire (now part of Mavis), two other longtime family-owned dealerships were acquired and no longer are part of the Top 100 ranking:

• Mountain View Tire & Auto Service (31 stores, $45 million in annual sales), the Mitsos-family-owned dealership in southern California, which was acquired by Monro;
• Allen Tire Co. (17 stores, $20 million in sales), the family-owned dealership, acquired by Monro.

Other acquisitions of note:

• Steve Shannon Tire & Auto Center (No. 40 on this year's ranking) bought Trombley Tire & Auto, a Penn Yan, N.Y.-based family-owned business with six locations in the Finger Lakes area of New York;
• AAA Northern California, Nevada and Utah (debuting at No. 79 on the Top 100) acquired McLea's Tire & Automotive Centers, a family-owned business with five locations in Sonoma County, Calif.
• Les Schwab Tire Centers acquired nine Plains Tire stores in Wyoming from Plains Tire Co., the Casper, Wyo.-based dealership owned by the Nicholls family with nine stores in Wyoming. The Nicholls family continues three stores in Utah under the Discount Tire & Auto brand and one store in Idaho under the Bargain Tire brand.

One intriguing business development: Icahn Automotive Group L.L.C. is leasing the retail space of 109 Pep Boys stores in California to Advance Auto Parts Inc., which is converting the space to Advance Auto Parts retail locations. The Pep Boys auto service business continues to operate at each location.

Crystal ball

Looking ahead, several major dealerships have outlined aggressive growth plans for 2022 and beyond. Among them:

• Belle Tire Distributors plans to open up to 60 retail stores in the Chicago metro area in the coming three years as part of an overall strategy to grow to 200-plus stores throughout its Midwest base of operations (Michigan, Ohio, Indiana and Illinois). The first four stores are scheduled to open before year-end.

• Monro has identified the U.S. Southwest as its next area of targeted expansion, both in terms of acquisitions and greenfield stores.

Monro has had success in building its presence in the West — California, Idaho and Nevada — but is "missing a lot of space out in the Southwest," CEO Mike Broderick told analysts in a May conference call. "We don't have many stores (there], but where we have opportunities to fill in, we will."

Mono's growth plans include greenfield construction as well as acquisitions, Mr. Broderick noted, stating: "... if we can't find viable M&A opportunities, we will start building our own stores," he said.

• Cincinnati-based Tire Discounters, the No. 10 dealership with 150 locations spread across six states, is adding franchising to its business portfolio to complement a growth strategy that management contends could see the company's brand expand nationwide.

While much attention in the past year was focused on dealerships' acquisitions of retail locations, three of the major players underwent ownership changes of their own.

Meritage Group L.P., a California- and New York-based investment group, acquired control of Les Schwab Tire Centers by buying out the shares owned by founder Les Schwab's family.

Meritage Group is a family-owned private investment firm with assets under management in excess of $10 billion. Founded by noted investor and climate activist Nat Simons in 1997, the group pursues investment strategies in public and private equity, credit and real estate.

Meritage Group has offices in San Francisco, Greenwich, Conn., and New York City.

The sale is expected to be completed by year-end; the purchase price is not being disclosed. Les Schwab posted sales of $1.9 billion in 2018, the last year for which financial results are available.

BayPine L.P. acquired majority ownership of Mavis Tire Express Service Corp. in partnership with TSG Consumer Partners LP (TSG) and existing equity-holder West First Management (WFM), a holding company controlled by David and Stephen Sorbaro, co-CEOs of Millwood-based Mavis.

Leonard Green & Partners of Los Angeles acquired majority ownership of Sun Auto Tire & Service Inc. — known previously as GB Automotive — from Greenbriar Equity Group Inc.

Greenbriar, which founded GB Automotive in 2017, remains a shareholder in the company. Greenbriar began building GB Automotive in 2017 with the acquisition of Brake Max Car Care Centers of Arizona.

In addition, Commercial Tire of Meridian, Idaho, converted to an Employee Owned Stock Partnership (ESOP). Bob Schwenkfelder, founder and CEO of Commercial Tire, told BoiseDev earlier this year that looking out for the company, its employees and customers had been a major concern.

"Selling the company could create unwanted change and instability for the people we care about," Mr. Schwenkfelder said. "This transition is about leaving a legacy for our employees and in our communities that will have a lasting, positive impact."

The Top 100 dealerships collectively operate 9,001 points of sale, up 3.5% over 2020.

Looking at the top 100 dealerships by affiliation, 14 dealerships with more than 300 points of sale are franchised businesses, including:

• Seven Big O Tires franchisees, with 174 points of sale.
• Three Car-X Tire franchisees, with 67 stores, in addition to 57 operated by franchisor Monro Inc.
• Two Point S dealers in the U.S. with 44 locations, and two in Canada with 30 locations.