Detore: What pandemic? Some dealers continue growth

This week marked a sobering milestone: More than 200,000 Americans have perished due to the effects of COVID-19.

Politics aside, this pandemic has meant an upheaval in our way of life — and cost many business owners their livelihood, tire dealers included.

And as fires rage in the Pacific Northwest, hurricanes batter the Gulf states and racial demonstrations turn dangerous all across the country, it's important to keep in mind those dealers who are and might be in peril.

Now, the good news.

Despite the events of 2020, tire dealers, for the most part, seem to be doing well. In fact, some tell us their business is performing better than at any time in their history.

But what is even more remarkable is this: Some dealerships are demonstrating no hesitation in growing their footprint.

Outside of a two-month period when nearly every non-essential business went dark and many essential businesses bottomed out to Great Recession levels, acquisitions seemed to occur at pre-COVID levels.

A sampling since July 1:

• GB Auto Service Inc. acquired Sun Devil Auto Service of Phoenix and Louetta Automotive & Tire Service of Houston, expanding its portfolio to 164 locations in four states;
• Driven Brands Inc., parent company of Meineke Car Care Centers, purchased International Car Wash Group;
• Wholesaler K&M Tire Inc. bought Safemark, located in Middletown, Pa., expanding its distribution footprint in eastern Pennsylvania;
• Telle Tire & Auto Centers Inc. is acquiring J&W Automotive, a single-location auto repair shop in St. Louis, expanding Telle Tire's network to 16 locations in Missouri;
• Jack Williams Tire Co. acquired a retail store from McCarthy Tire Service, its second in Scranton, Pa., and 37th overall;
• Gills Point S Tire & Automotive Service of Oregon has acquired 10 Vianor-branded retail stores in New England from Finnish tire maker Nokian Tyres P.L.C.; and
• Leeds West Groups (LWG) added five locations — two in Kentucky, and one each in Ohio, Colorado and Oklahoma, as well as purchasing the real estate of three other locations (two in Colorado, one in Wisconsin). That list doesn't include an acquisition of a Nebraska location that was finalized in early May.

"(John D.) Rockfeller made all his money in downturns," Eric Gill, president, owner and CEO of Gills Point Tire & Automotive Service, told Tire Business shortly after his acquisition of Vianor was announced. "Probably most people in the tire industry right now realize that the pandemic actually has not had a huge negative impact other than two months of not knowing what's going on. At least both Point S and my stores have seen positive growth for the year."

Mr. Gill, with 17 locations in the Pacific Northwest, where COVID-19 hit early and hard, said he believes the tire and auto service industry is going to survive the current downturn better than many industries.

"...We're still facing a really positive growth year. Timing sometimes is things you can't control. You got to pounce when the opportunity presents itself."

LWG CEO Judd Shader, who describes his company's approach to growth as "cautiously aggressive," said business is going well for his 107-location dealership.

"It's business as normal with the caveat of obviously of what we're doing from a coronavirus standpoint as precautions ..." Mr. Shader said. "It's still a little slower in the Northeast ... but it's definitely coming back. From a business standpoint, outside of the obvious of how you are doing business, revenues look good, projections look good.

"The industry, I think, put a very good foot forward and showed how resilient it was in today's world of brick-and-mortar retail."

Mr. Shader draws a parallel to the Great Recession of 2007-08, especially from a business mixture standpoint. He said while maintenance business — filters, flush kits, etc. — is down, the repair business — especially tires — is surging.

The reason, he said, is people are holding onto their vehicles longer. Consumers who had planned to purchase a vehicle in 2020 have changed course, opting to repair rather than replace.

"Maybe if they were going to buy a new car, they buy new tires instead," Mr. Shader said. "We're definitely seeing tire sales up, as product category as a whole."

Mr. Shader said LWG reacted to the pandemic very quickly, unlike most companies. The group, he said, had its plans fully executed by early April and was ready for the business rebound that began in mid-April and beyond.

"We were in a position that we didn't need (the coronavirus) to slow us down," he said. "We weren't going to say 2020 was a wasted year for us. We declared pretty quickly we weren't going to fire-fight manage. We knew how we were going to manage through it ... it wasn't going to allow us just to throw 2020 by the wayside. So we attacked that pretty hard."

There is no doubt 2020 will go down as one of the most difficult years in modern times. But it also seems to be a shining example that the tire and automotive service business remains viable, profitable and worthy of investment.