As another year comes to a close, tire dealers are preparing for the year ahead. Many of them found success in the past year and expect similar results for 2020.
"This will be our best year ever," David Sands, president of Honolulu-based Lex Brodie's Tire, Brake & Service Co., said about 2019. Lex Brodie's has been in business for 58 years.
He noted 2019 was the best year both in terms of highest sales and profit, and all areas of the business have grown steadily over the past few years.
Greg Mynaugh, president at Pottstown, Pa.-based United Tire & Service, shared a similar sentiment.
"Overall sales growth is up 6.2% over 2018, which was our group's best year ever," he said, noting that service sales are up 7.7% and tires have grown 2.6%.
For North Salt Lake City, Utah-based Burt Brothers Tire & Service, the addition of new stores helped bump sales in 2019.
"We had a great year," Jake Burt, owner of Burt Brothers, said. "We opened two new stores and a commercial fleet center."
The dealership opened one location in February and a second in November and the commercial center in July. Including the new stores, sales rose 6%, Mr. Burt added, and even with the new stores taken out of the mix, sales were still up.
"We've been busy," he said.
The one new location, in Draper, Utah, is a former Firestone Complete Car Care outlet that Burt Brothers had acquired and converted to its own identity.
"The Firestone stores did not renew their leases this year here in Utah," Mr. Burt said. "They closed 12 stores here, so I think that, and what we are doing helped a lot of growing our sales. ... I know some people have found us, which has been good."
Other tire dealers didn't see such great results.
"Through the first eleven months, we are down a little in tires, but up in service," Kim Sigman, partner and general manager at Phoenix-based Community Tire Pros, said.
He noted that 2018 was a record year for the business and was much higher than budgeted. In turn, he budgeted for 2019 based on those results.
"We felt with the economy much stronger it would show in our sales/profits, but so far it hasn't," Mr. Sigman said.
Tire sales fell about 5%, he added, attributing part of this to a takeover where the business lost one of its largest tire customers. On the flip side, service sales rose about 5%.
"Regarding our 2018 year, our business was up much more than budgeted and if we take that out of the mix, which we can't, but if we could, then where we'll end up in 2019 would produce numbers that in any other year we'd be very pleased with," Mr. Sigman said. "But mediocre compared to 2018."
Mountain View Tire & Service Inc. also didn't have its best business year, according to Chris Mitsos, vice president of the Rancho Cucamonga, Calif.-based dealership. He said the year was up less than 2% versus 2018 through Nov. 30. Tire units were the only negative number — down 0.8%.
Whether tire dealers had a banner year or have seen better, most were investing in their businesses in one way or another. Equipment and staffing were significant areas for investment last year.
Mr. Sands said Lex Brodie's invested in normal equipment purchases. He added they have also added staff and would add more if qualified applicants were available. The job market is very strong in Honolulu.
"We have an excellent, dedicated management team (corporate and store level) that focuses first and foremost on taking care of our customers," Mr. Sands said.
"Training (technical and interpersonal) at all levels is ongoing – we stress continuous improvement in our practices and procedures."
Lex Brodie's is not the only tire business that sees the benefits of supplying resources and training to its employees.
Mr. Sigman said in 2019: "We made several major equipment and leasehold improvements." Yet, he credits a large part of 2018's success to the promotion of the company's best A tech shop supervisor.
"His role is to make sure that we have the right techs in the right seat in the shop, they are trained for the level of tech they were hired for, and if a tech has an issue they can't solve/fix/diagnose, he will go to that store and handle it," Mr. Sigman said.
Staffing, as well as opening the new stores, is a sizable reason for Burt Brothers' recent growth, Mr. Burt said.
"We made major investments this year in our people, and we are already seeing the dividends," he added.
"We credit our great personnel and our amazing team members that we have onboard to much of the success. I think we truly have the some of the best people in our market right here."
United Tire also invested in equipment, Mr. Mynauch said, and increased spend on marketing.
"We are much more digitally focused since 2017. That supports where our customers are looking for us," he said.
"Live chat, digital inspections for customers, cars. It's a mutual fund approach to all things digital really."
Mr. Mitsos said Mountain View Tire & Service has opened five stores in the last 18 months, all of which were new store construction.
"It is challenging both financially and saleswise, as it generally takes a few years for a brand-new store to hit its stride," he added.
Tires and service
While tire sales seem to differ from dealer to dealer, they are all seeing favorable service work.
"Mechanical service and dollars per invoice continue to be steady from year to year with modest growth," Mr. Mitsos said.
"Our tire units tend to be decreasing as competitive forces increase. Tire revenue is actually going up because of the manufacturer-driven cost increases."
Mr. Mynaugh said United Tire has seen growth in its Tier 1 brands overall, with the exception being Goodyear, which has declined.
Additionally, he is seeing light truck and larger diameter tires continuing 2018's growth.
"Continued growth is often driven by the types of cars being built, (light trucks) up 3.2%, while passenger tires are slightly down 1% as I see the market," he added.
"We are ahead of these statistics. Our growth is really through a more customer- and employee-centric focus. Our customers have asked for a loyalty program and we have provided one.
"Taking our CRM data and providing our customers real-time insights, rather than just serving advertisements, is making a difference."
Mr. Burt agreed that technology is changing the way many dealers, along with their customers, are doing business.
"Our online appointments have gone up," he said.
"We see a lot of customers buying tires online."
Consumers are involved in the buying process by researching tires on dealership websites, Mr. Burt said.
"We made that super easy for them to do, where they can do their research online and purchase online and then come into our stores to have them installed," he added.
"They still need a place to go, which we're trying to be that place, and we're just trying to make it easy for them."
Beyond just evolving the tire-buying process, even an uptick in electric vehicles shows how technology can shift business.
"We are seeing a lot more electric vehicles," Mr. Burt said.
"Obviously, we are not doing oil changes for them, but we are putting a lot of tires on them and brakes."
Needing new tire sizes and SKUs is a big part of servicing more electric vehicles.
"You need to have the quiet sound technology. … Those cars are pretty quiet, but if you put the right tires on them that does make a big difference for them," Mr. Burt said.
Regulation can also alter what is coming into the shop.
"In the state of Utah, they changed it last year where the safety inspections were not required anymore," Mr. Burt said.
"I think we're seeing repercussions of it right now, this year when the weather hit for the first time. There was a really big frenzy of cars coming in needing tires."
He said the company was worried about the new ruling and how it would affect business, but they haven't seen a downturn.
Consumers are seeing the advantages of regular service.
It seems that more and more people are willing to spend money on maintenance, Mr. Sigman said.
"Repairs of broken or worn-out 'stuff' is easy to sell, but in order to sell maintenance the customer must be convinced there is a value," he added.
Even with a possible recession and a definite presidential election on the horizon, tire dealers are looking forward to the future.
Mr. Sigman said he feels 2020 will be equal to or maybe even better than Community Tire Pros' record year in 2018.
He is not nervous about a possible recession, "unless our infamous politicians talk the consumer into it."
In terms of the upcoming election, "You never know and my crystal ball is broken, but… at this point I'm not nervous about the election, but it is still almost a year away," Mr. Sigman said.
Mr. Sands shared a similar sentiment. He said he expects continued steady growth in 2020.
"While I don't expect a recession, unless President Trump is not re-elected, we are not nervous in the event one occurs," he said.
"Recessions are good for our business. Less new car sales, customers keep cars longer requiring more no- dealer warranty work and replacement tires. Plus, more potential new employees become available."
Mr. Mitsos said he is not nervous about a recession and that California worries him more than the economy or the presidential election.
"I am expecting more state of California interference in 2020 and lawsuits against our company to increase in scope and number as more and more people are buying into the 'grievance culture' that the state has created," he said.
"Typically, in previous presidential election years, we would see a small slowdown in the three months leading up to the election. I am not sure if we will see that this time."
Other dealers find a possible recession more troubling.
"Potential for recession is a concern," Mr. Mynaugh said.
"Initial reaction likely slows sales short term, but when new car sales are down, we find service sales and maintenance of cars improves."
He said customers then start taking more care of their cars. Additionally, Mr. Mynaugh noted the election can affect advertising spending for United Tire because it decreases the available inventory for traditional media.
Yet, he is still optimistic for growth. Mr. Mynaugh's other concerns are with manufacturers and potential changing relationships with tire distributors.
Overall in 2020, he expects "more of the same in growth, conservatively 3% overall, driven by tires," he said.
Mr. Burt said Burt Brothers is always looking for the next opportunity and has at least one more location in the works to open in 2020.
"Our manufacturers continue to want more and more every year, and we're hoping to be able to do that for them," he said.
When thinking about a possible recession, Mr. Burt said, "Whatever happens, happens. And we're going to make the most of it."
He added that he's grateful to be able to offer the financing options they have, including easy payments, six months no interest, and no credit check options.
"People still need to get to work, if there are jobs," Mr. Burt said.
"Or if there aren't jobs, they have to go out looking for them. … So we're hoping it's their vehicles that are going to get them (there) and they are going to need to come here and get them serviced."
Whether it's a good year or a bad year, tire dealers are continuing to work to be the best partner to their customers.
As Mr. Sands said, "No one really wants to have to replace tires or get their vehicle repaired, but at Lex Brodie's we attempt to make the customers visit as pleasant and stress-free as possible."