ITDG travels ‘a road that's well-paved'

SAN ANTONIO — "Growth begets growth."

That phrase, uttered multiple times in a recent interview with Independent Tire Dealers Group executives Dave Marks and Jason Rook, captures the spirit of the buying group's essence as it rolls toward its 30th year of business and transitions to new leadership.

The group, founded by a handful of dealers in California in 1994 to explore buying options outside of the Tier 1 producers, has grown to 164 member-companies operating 1,051 points of sale and generating nearly $350 million in annual purchases.

Rook, the former Tube & Solid Tire Ltd. CEO who was picked in February take over the group's leadership, succinctly summed up his vision for the coming years — while paying tribute to outgoing top exec Dave Marks — saying:

"First thing is to stay on course. I'm walking into a very healthy company that's growing in all facets," Rook said in a conversation with Tire Business, pointing to ITDG's 50% revenue growth over the past five years.

"We're on a road that's well-paved, and we have the vehicle [to keep moving forward] from here."

To help keep the ITDG ship moving forward, Rook said naturally there will be new initiatives designed to optimize the buying group's performance, but those will be crafted carefully so as to not over complicate things.

Any new initiatives, he stressed, will be vetted for return on investment with the ITDG membership "to make sure we're headed down the right path."

Marks, who was hired by ITDG in 2017 to succeed the then-retiring Michael Cox, helped steer the group through the rigors of the COVID-19 pandemic and subsequent market gyrations, leaving a group that's measurably larger in terms of members (up 17%), points of sale (up 73%) and gross purchases (up 62%).

Since the group's meeting a year ago, ITDG has accepted 18 new members, representing 102 retail, commercial and/or wholesale points of sale.

That growth helped offset the loss of nine members — including eight shareholder companies — and 38 points of sale, primarily through attrition via acquisition by entities outside of the ITDG membership.

That amount of "churn" was reflected in part in the group's collective sales, which were essentially unchanged from the year before at $342.5 million. The mix of sales changed, however, with auto parts representing a larger share (18%) of the mix. Tire sales were off slightly but still represent 74% of the group's purchase volume.

The group was able to replace those member companies that exited with new members that the ITDG staff already had been vetting for possible membership in the group.

The membership now has representatives in 45 states throughout the U.S.

Other salient points presented: Shareholders accounted for 97% of the group's gross purchases, with an average purchase volume of $2.73 million. The group paid out over $13 million in volume bonuses and dividends, or $107,288 per shareholder.

Addressing the assembled group at the meeting, Marks said that the ITDG is poised for growth for a number of reasons — compelling vendor programs, the need for collective buying power, etc. — but that the group will adhere to a business model based on what he calls the three C's — competitive, consistent and compelling — in selecting new members and/or vendors.

In remarks to Tire Business, Marks and Rook stressed that the group's vetting process for new members always involves current members and consideration for territorial integrity. That being said, however, they noted that with the group's footprint stretching coast to coast, continued growth naturally will involve some "back-filling" in territories where there already is a member or members.

They also stressed that ITDG will continue to adhere strictly to its distinct business model of blending larger, multiple-outlet dealerships with smaller-volume dealers, a principal that dates to the group's founding nearly 30 years ago.

Looking ahead, Rook noted that the "churn" created by the wave of mergers and acquisitions that's been building the past several years will be one of ITDG's biggest challenges moving forward.

"The challenge is to keep our same standards and ethics, …" he said, "something we won't abandon. It's tough when members get acquired."

At the same time, he noted, "Volatility in the marketplace … is becoming the norm. 2009 the last year it was "normal." Right now, too many tires are warehoused that are overpriced; at the same time lots of lower-priced tires are coming in, especially from overseas."

"Dealers are going to have to work hard this year just to stay flat," he said.

And those challenges are precisely why ITDG exists, the executives said.

Rook didn't outline any specific growth goals for the group, instead focusing on "targeted growth" that keeps the group's founding principles front and center.

Targeted growth will include initiatives for smaller dealers, Rook said, those who aren't necessarily looking to become shareholders.

By continuing to grow the membership, ITDG becomes a more attractive business partner for vendors, Rook and Marks noted in their discussion with Tire Business.

Over the past couple of years, ITDG consolidated its roster of vendor partners down to 70 from as many as 92, while at the same time growing volume with the remaining vendors exponentially.

Rooks said he expects the number of vendor partners to increase again to provide a growing range of purchase options for members.

That gets back to the "Growth begets Growth" comment both Rook and Marks evoked during the interview.

ITDG has now reached the point in sales volume that makes the group more attractive to a larger range of vendors, Rooks said, and also provides ITDG with more leverage to negotiate attractive terms for the members.

During the group's three-day gathering in San Antonio, the ITDG named Youngblood Automotive & Tire of Austin, Texas, as its dealer of the year, and Clay Miller of Mainstreet Tire in Colorado Springs, Colo., was presented the chairman's award.

There were about 160 individuals from 75 member companies present the meeting, along with 140 or so vendor representatives, ITDG staff, etc.

New members to the group in the past year include:

• A&B TIre Service Inc., Leominster, Mass., 1 location
• Basin Tire Service Inc., Klamath Falls, Ore., 1 location;
• Dan's Tire Service, Roosevelt, Utah, 1 location
• Dan's Tire Service, Vernal, Utah, 1 location;
• Fremont Tire, Sioux City, Iowa, 4 locations;
• Friendly Wholesale Tire, Bryan, N.C., 2 locations
• Jersey Wholesale Tire Co., Parlin, N.J., 3 locations;
• JP Thomas & Co. Inc. (Thomas Tire), Asheboro, N.C., 12 locations;
• Pelc Tire & Service, Saraland, Ala., four locations;
• Public Market Inc. (Big O Tires franchisee), Salt Lake City, Utah, 1 location;
• Reliable Parts Co. Inc., Huntsville, Texas, 2 locations;
• Shak Enterprises Inc. (Tire Pros), Glendale, Calif., 5 locations;
• Steve Shannon Tire Co., Bloomsburg, Pa., 31 locations;
• Tire Town Auto Service, New Orleans, 4 locations;
• TireSouth Inc., McDonough, Ga., 5 locations;
• Tom Fouts Tire, Oakwood, Ga., 5 locations;
• Tri State Tire & Rubber Co., Dothan, Ga., 1 location; and
• W.W. Tire Service Inc., Bryant, S.D., 8 locations.

As for the transition to Rook as CEO, Marks likened it to the 24 Hours of LeMans, where drivers take turns at the wheel throughout the race without the crowd noticing who's driving. The goal is for the members to not notice.

"Our DNA … is we leave egos at the door. Be humble, be confident, not cocky. That's how we go to market," he said.

That said, Marks said he'll keep lines of communication open with ITDG for awhile to help sew up any loose ends. "I may be retired, but I'm not going anywhere."

Rook does plan one change, to expand ITDG's staff by adding an inside sales component to handle business inquiries as the group continues to grow toward a half billion dollars in gross purchases. That will complement the two fulltime outside salespeople.

Marks' time with ITDG caps a 40-year tire industry career that includes time spent in executive roles with Big Brand Tire, EMPCO Industries, Toscalito Enterprises Inc., Tire Dealer's Warehouse and Tireco Inc.'s Tire Distributor Xperts (TDX) wholesale arm.

He said plans to travel extensively, play golf at every opportunity and continue to enjoy his hobbies of creating grilling rubs and building one-off custom skateboards.

The ITDG's 2024 meeting is scheduled for April 24-27 in Cancun, Mexico, at the Secrets Akumal/Riviera Maya.