Exxpress Tire grows sales slightly despite headwinds

WILLEMSTAD, Curacao — The steady winds blowing off the Caribbean Sea and through the Curacao beach resort were reminiscent of the conditions that many tire dealerships faced in 2024.

The headwinds of inflation, logistics, a mild winter season and other local, national and global flashpoints tousled through most every sector in the tire industry in 2024.

Exxpress Tire Delivery L.L.C., the Buffalo-based tire distributor that serves upstate New York, western Pennsylvania and northeast Ohio, withstood those strong gusts enough to generate sales growth of 0.6% last year, increasing business with both its independent tire dealer and auto dealer channels just about equally.

That comes with the backdrop of the industry down by 1.4% and New York state down 0.5% in total units versus 2023.

"It's nothing to write home about," Stephen Clave, Exxpress Tire's vice president, told a group of dealers during Exxpress' annual dealer conference, held Feb. 27-March 3 at the Curacao Marriott Beach Resort. Around 140 people, including dealers, spouses, vendors and staff, attended the five-day event.

"It was not at all an ideal season, but, you know, just a little bit of growth," Exxpress President Dave Simons told Tire Business. "We were kind of happy with a little bit of growth when most people are going the other way, or the industry is going the other way."

Exxpress Tire — which continued to reorganize over the last year after the sale of its retail unit, including 25 Dunn Tire retail outlets in New York and Pennsylvania, in 2023 to Reinalt Thomas Corp./Discount Tire — persevered through another headwind that has whipped across through much of the industry as well: the explosion of demand for Tier 3 and 4 products.

With inflation pushing prices higher, consumers bought a record number of the lower-tier products, at the expense of the higher tiers. Clave said Exxpress Tire doubled its combined Tier 3 and 4 sales in 2024. (Exxpress classifies most imports as Tier 3 or 4 products).

"Tier 2 is under attack," Clave said. "It doesn't matter who the brand is, and the manufacturers are realizing this as well."

Increased sales of less expensive tires create margin pressure. While the percentage is similar, making 15 points on an $80 tire instead of 15 points on $120 tire impacts the bottom line.

"Everybody's in the mode to shed costs," Clave said. "We've been very, very good in terms of expense management. We've been fortunate. We've had some insight, we've gotten ahead of it, so we've been able to ensure that we would be competitive and viable in the marketplace."

Vice President Paul Pittner credited suppliers for helping manage the demand.

"Our inventory is the best as far as expenses since the pandemic started," he said. "It's been the best. We had a lot of people that were hunting and pecking around other people to get sizes and stuff. It came to a much cleaner run with all of that. So I think that has helped our situation."

Clave said the company deserves credit for tightening up its inventory management. He said Exxpress Tire holds weekly meetings with the sole purpose "to measure inbound percentages against the needs of the business at the warehouse level," all the way down to the article number.

"We have really tightened up our inventory, increased our inventory turnover, the velocity at the article number, and we've put ourselves in a good position to be very, very competitive, be cost-efficient," Clave said.

Another big positive for Exxpress has been the success of its Exxpress Rewards dealer program, which kicked off in early 2024.

The goal of the program, geared toward the independent tire dealers as opposed to the car dealer network, was simple: To increase dealer compliance with manufacturer programs.

"The biggest challenge was, 'How do we align the program with the manufacturers for ease of use?' " Clave said. "The more we talked it through, we came away with the simple formula: Buy a tire, earn a point."

Clave said the program is driving sales of its Tier 1 and 2 brands, which he said tops more than 200,000 units.

Overall, the program has boosted compliance in all manufacturer programs within its dealer network by 17 percentage points (53% to 70%).

The program was particularly successful with certain manufacturers; in fact, Clave said it outpaced Continental Tire the America's program by 16 percentage points.

"This was just another way to get people focused on their compliance, because the last thing you want to do is get people signing up," then getting removed from the program for not reaching the goal, according to Simons.

"That just creates this negative relationship point with our customers ... So this is just another way to get them to pay attention to hitting their compliance numbers with the suppliers," he said.

"You get all the benefits of the supplier program, and, oh, by the way, you get this other program, too."

Around 85% of Exxpress Tire's dealers are registered for the program, and that number continues to increase. It is just another way of enhancing relationships with its dealer network.

"We wanted to get away from the very aggressive transactional business in the space," Clave said, noting some larger distributors have priced products aggressively to "kind of influence dealers to come to them."

Instead, he said, Exxpress Tire "created some stickiness, and we've said it before, our relationships are the most important thing to us," Clave said. "We're the incumbent in the majority of our markets. So why not leverage our biggest asset, our most valuable asset, which is the relationship.

"We put our money where our mouth is and it is working for us."

Some dealers, in turn, have used their points to acquire products that they often give back to employees, either as incentives or holiday gifts.

The dealer program is one of four revenue streams under the Exxpress Tire brand hierarchy.

The others are the Exxpress Delivery Service; Exxpress Tire Digital (a business solution launched this year for the car channel); and a fourth entity that Exxpress hasn't yet revealed.

Exxpress, however, still dabbles in the retail world, providing Discount Tire-owned Dunn Tire with around 90% of its inventory. The two entities still meet monthly to work through any issues.

Simons noted that Exxpress Tire kept Dunn Tire employees on their payroll until June of last year, and Exxpress Tire was operating the Dunn Tire website through last December.

"It's been a very good relationship. It continues to be, and now it's becoming more of a supply relationship," he said, noting they have plenty of other supplier options to consider.

"But we have warehouses in their neighborhoods, so we've made it very easy for them to just kind of continue on business as usual, as though nothing really happened," according to Simons. "So it's worked out very well. And they really are excellent people to do business with."

The leadership team said the program is part of its dealer-focused approach that includes:

• Listen to their needs and make market-driven business adjustments;
• Maintain local, personalized service with field sales people who know their customers;
• Be transparent about program requirements and help dealers understand compliance goals;
• Provide monthly reporting and clear performance metrics; and
• Keep communication open and collaborative, showing dealers you're invested in their success.

The key, they said, is to treat dealers as partners, not just customers, by offering support, flexibility and clear benefits that help them grow their business.

"We're in business together," Pittner said. "We want to help you; you help us, keeping that closeness together."

"We're not a national that is dictating how business is going to be done," Clave said. "We listen to the voice of our customers."

"We can offer everything that the big regionals, if not the nationals, can offer," Simons said, "but on a very local and in-your-neighborhood relationship."