Exxpress Tire Delivery emerges ‘better, stronger'

MARCO ISLAND, Fla. — Under the pink and orange sunset, a group from Exxpress Tire Delivery gathered at tables on a white-sand beach, toasted a successful year and joked, "It seems like a whole pandemic since I saw you last."

It's been two years since Buffalo, N.Y.-based tire wholesaler Exxpress Tire Delivery (ETD) held its conference for top-selling tire dealers, but from the start of the 2022 event — held at JW Marriott Marco Island resort March 2-6 — the message was clear: Business never stopped.

"The last two years taught us change is inevitable. It's constant. It's tested our resolve; it's tested our diligence. It's tested our resilience," Dave Simons, president, said. "Here is one thing I can stand up here and unequivocally state: We're better, and we're stronger."

ETD hosted 140 dealers, guests and staff for the five-day event to honor its top customers. The conference featured updates from ETD and several tire manufacturers and a keynote address from Dave Zielasko of the Tire Industry Association and former Tire Business publisher.

The ETD team spent much of the time talking with customers and presenting the latest updates on the wholesale business and the tire industry.

Steve Clave, managing director of wholesale operations, told dealers business has not stopped. In fact, he said it hasn't even slowed down.

EDT managed its way through the worst of the pandemic and rebounded with an increase in units sold of 9.2% in 2021 compared with 2020, which was down 5% from 2019.

"We had a very good rebound after we came through the pandemic," Clave said.

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ETD's wholesale footprint includes five distribution centers serving customers in upstate New York, western Pennsylvania, and parts of eastern Ohio and West Virginia. ETD is owned and operated by Dunn Tire L.L.C.

The COVID-19 pandemic and resulting supply chain issues presented challenges, but Clave said the company approached each one with care — from an early adoption of new health and safety measures to navigating the chaos of delays and short supplies.

"(The pandemic) changed the business. It changed our entire lives," he said.

ETD did not lay off or furlough any employees during the pandemic.

When much of the country was shut down, Clave said the company made a conscious effort to reach out to customers, not even for the purpose of a sale but just to let them know they were out there.

"We recognized the need to be emotionally connected to our dealer base," he said.

The ability for ETD to stay in business during the pandemic revolved around safety.

"Our logic was pretty simple, 'we have to be safe in order to remain safe,' so our protocols were very strict," he said. "We talked about hygiene, literally, on the hour within our corporate office."

The pandemic brought an increase in safety precautions, brief production stops globally and sudden increase in consumer demand, he said. The supply chain is overloaded, and the shortages aren't just on the supply side, either. Maintaining staff at every level of the supply chain is problematic, too.

ETD announced it is "hitting pause" on plans for its associate dealer program Express Car Care.

"Many programs were impacted in the last couple years, and this was one of them due to manpower," Clave said. "One of the things we have come to realize is manufacturers are now starting to build programs very similar, so we decided to step back and analyze the program and make some determinations as to what the program will look like moving forward."

Despite these constraints, demand keeps growing. Passenger tire shipments in U.S., for example, rose by 20 million units in 2021 over 2020, according to the U.S. Tire Manufacturers Association.

"Inventory management is going to play a key role in your profits going forward, no question," Clave said.

The company believes inventory shortages will continue throughout the year, Clave said, due to delays from overseas, shipping challenges and container shortages.

ETD said it is getting assistance from "collaborative forecasting and made-to-order productions."

The company said manufacturers are taking steps to increase fill rates with improved days of sales coverage, increased order frequency and targeting volume increases on the most popular and profitable tire SKUs.

"2022 looks like it will be as tight as 2021 with some very slight improvements," he said.

Tire prices rose about 20% in the last year, Clave said, and the cost to manufacture rose around 24%. This is due to several factors, including increased freight and raw materials costs, and recent increased tariffs in southeast Asia.

"There's no way to get around it," he said. "As an industry, we have to become more reliant on domestic production, and we have to reduce our reliance on import supply."

Recovery of the original equipment market has been hampered by a shortage of semiconductors for new cars.

Fewer new vehicles in the market also contributes to lower overall vehicle usage, along with other factors such as working from home, pandemic shutdowns, increased gas prices, an aging population and a younger generation less interested in owning a car, Clave said. This results in an increase in the average age of a vehicle, which in the U.S. is 12 years. That should be good news for the replacement market.

Other factors impacting the industry, Clave noted, were mergers and acquisitions in 2021 that introduced new, big players to the market. That will mean that more brands will be available in more markets, and competition will increase, Clave said.

Simons reminded dealers at the conference of the power they and ETD hold collectively within their footprint to compete with anyone.

"From Upstate New York, Western Pennsylvania, a little bit of West Virginia and a little bit of Ohio, we have a 1,000 points of sale between us," Simons said. "From Plattsburgh to Pittsburgh, nobody has a better sales staff. We can own our areas where we do business."

ETD, in business since 1997, operates five distribution centers: Buffalo, Rochester and Syracuse, N.Y.; and Pittsburgh and Erie, Pa.

Clave said all five distribution centers had year-over-year growth in 2021. In Pittsburgh, where ETD has been active for six years, ETD saw a 10.9% year-over-year growth in the market. In Erie, the company saw 3% growth.

Business in the more mature Buffalo market grew 6.8%, and thanks to moving into a larger facility, Rochester saw an 18.5% increase.

ETD said this year it plans to open a larger warehouse in Syracuse, where the company saw 5.9% growth in 2021 compared to 2020.

"Same concept (as the other sites), better productivity, better efficiencies. We should realize accelerated growth moving forward in the Syracuse market," Clave said.

The Syracuse facility is expected to open in late summer.

ETD also talked about becoming the presenting sponsor for the 2022 Buffalo Auto Show, which Clave described as a great way to "get our shared voice in the market."

The company also is working with charity. ETD partnered with Kids Escaping Drugs, a western New York addiction outreach organization.

"As a corporation, we have a social responsibility to give back," Clave said.

"We seek to help or assist them by offering employment opportunities to reintroduce today's challenged youths back into the community."