20 minute read
Industry News
from Modern Tire Dealer - January 2022
by EndeavorBusinessMedia-VehicleRepairGroup
ModernTireDealer.com
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Two of the biggest, most well-known names in the tire industry have joined forces. Discount Tire, the largest brick-and-mortar independent tire dealership in the United States, has acquired Tire Rack, the industry’s largest online tire seller.
Two important articles about Discount Tire’s recent acquisition of Tire Rack were the most-read stories on MTD’s website during the past month. Other major tire dealership acquisitions grabbed readers’ attention, with Percheron Capital/Big Brand Tire & Service, Sun Auto Tire & Service Inc. and Tire Discounters Inc. adding new properties.
1. Discount Tire acquires Tire Rack 2. What’s next for Discount Tire and Tire Rack? 3. Percheron/Big Brand Tire acquires American Tire Depot 4. Sun Auto Tire to acquire Plaza Tire 5. Discount Tire CEO: ‘Nothing is off the table’ 6. Consumer tire technology — what’s next? 7. Tire Discounters grows with 3 acquisitions 8. Bridgestone plans 2022 consumer tire price hike 9. BKT continues to invest in manufacturing capacity, growth 10. Belle Tire enters Chicago market with two new stores
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Discount Tire buys Tire Rack
ONLINE SELLER CALLS DEAL A ‘MILESTONE’ IN ITS HISTORY
Discount Tire, which has more than 1,100 locations across the United States, has acquired Tire Rack. Founded in 1979, Tire Rack has grown from a mail-order business to a top online operation, with well-known tire testing capabilities.
Two of the biggest names in the tire industry have joined forces. Discount Tire, which has more than 1,100 brick-and-mortar stores across the United States, has acquired Tire Rack, the industry’s oldest and largest online tire seller.
Discount Tire says the acquisition shows its commitment “to provide the most inviting, easy and safe omnichannel, business-tobusiness (B2B) and fleet customer experiences in the world.”
The transaction closed Dec. 31, 2021.
Discount Tire CEO Dean Muglia will continue in his present role. Mike Joines, with 42 years leading Tire Rack, joins the combined organization, along with Matt Edmonds and Mark Veldman of Tire Rack’s executive team. (Joines is Tire Rack’s CEO.) Other members of Tire Rack’s executive team will continue in their roles.
In addition, the Veldman family, the founders of Tire Rack, will have representation on the board of directors of Discount Tire.
In a combined announcement, Discount Tire says it will continue to use the Tire Rack name and website, as well as the TR Wholesale Solutions name that tire dealers are familiar with.
Tire Rack’s Mobile Installation business also will continue under its existing name.
“We have for many years admired one another from afar, each pushing the industry forward to meet customers where they are most confident shopping for tires and wheels,” says Muglia.
“We could not be more excited about adding Tire Rack’s operations and its excellent team led by Mike Joines, who I’ve come to know well.
“This accelerates our omnichannel strategy (and) provides a broader distribution network and a platform to enhance our B2B and fleet capabilities. Quite simply, we are better together.”
Joines has been with Tire Rack since its beginning and was tasked with running the company by its founder, his father-in-law, Peter Veldman.
“We believe we can provide a greater impact through better service to customers that have chosen Tire Rack for their tire and wheel needs and provide better opportunities for our team members through this partnership,” he says.
“Joining the Discount Tire family is an incredible milestone for our business, an opportunity for our team members and a testament to the hard work and legacy of Peter and Wilma Veldman. We’re thrilled to become a part of Discount Tire, a company that serves customers through an inviting, easy and safe experience, while also taking care of and valuing their team members.”
As of Oct. 31, 2021, Tire Rack employed more than 950 people. Its headquarters will remain in South Bend, Ind.
“We were attracted to Tire Rack for the vision they share with Discount Tire in transforming the omnichannel, B2B and fleet customer experiences,” says Michael Zuieback, executive chairman of the board of directors at Discount Tire.
“We are excited to collaborate on enhancing the tools and technologies that will advance an entire industry.”
Tire Rack is a pioneer when it comes to selling tires online.
The company was founded in 1979 by Peter Veldman. At that time, Veldman was operating a service station in South Bend and a retail store, Veldman’s Service Center.
By 1982, he was selling specialty tires to enthusiasts via mailorder catalogs.
By 1990, Tire Rack turned its attention fully to the mail-order business and Veldman’s store closed. In 1995, Tire Rack added tire testing to its repertoire.
In 2012, when Veldman was inducted into the Tire Industry Hall of Fame, he admitted he was initially skeptical that his mail-order idea would work for tires.
But he saw a need for customers to easily find and acquire specialty tires.
His gamble turned out to be spot-on. Tire Rack would become one of the first tire companies with an online presence.
By 2014, “the Rack,” as it’s often called, counted 50 million visitors to its website each year.
The company has 10 distribution centers in the U.S., with more than 2.8 million square feet of space.
Enthusiasts who live in or near South Bend can have their tires installed on site.
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What’s next for Discount Tire and Tire Rack?
EXPERTS SAY DEAL IS ‘BOLD’ AND ‘EARTH-SHATTERING’
Discount Tire’s acquisition of Tire Rack “is earth-shattering in terms of a couple of companies that pretty much focus (only) on tires, but do it in di erent ways,” says Michael McGregor, tire dealership mergers and acquisitions expert and a partner at Focus Investment Banking.
“Discount Tire is location-based. Tire Rack is direct-to-consumer. And Tire Rack has a mobile installation element in its direct-to-consumer model, too.”
John Healy, managing director and analyst at Northcoast Research Holdings LLC, says the Tire Rack acquisition “is rather bold for Discount Tire.”
Professional hockey legend “Wayne Gretzky used to say, ‘You skate to where the puck is going to be, not where it’s at.’ And I think that’s what they are doing here.”
Consumers are still primarily using the internet to research tire information and pricing, Healy says, “but I still think they want to (deal with) someone at the counter. Tire Rack is one of the major stops for (research) — if not the largest.
“At some point, more consumers will purchase online and by having its retail outlets integrated with Tire Rack,” Discount Tire will become what Healy calls “the installer of choice for the largest online retailer. It’s a natural, symbiotic relationship, and it’s very smart.
“If I were one of the other larger, regional tire chains, I would be thinking, ‘Should we do the same?’ ”
McGregor sees “synergies” between Tire Rack and Discount Tire’s existing e-commerce arm.
“Instead of having two separate organizations doing the same thing, chances are they will nd a way to synergize the two.”
Healy expects the two entities to remain separate. “I think eventually, if you’re the folks at Discount Tire, you gure out which one of your e-commerce platforms has the most traction, but that doesn’t mean you discontinue operating both of them.
“I think there will be synergies running both e-commerce platforms separately. We’ve seen this with online travel. A lot of the online travel websites are owned by one company, booking.com. I can imagine that would be a parallel to what can transpire here over the next few years.” e deal also opens the door to other possibilities, says Dennis McCarron, partner at Cardinal Brokers Inc.
“It’s unclear what Discount Tire’s intentions are yet, but they could expand to a similar model that American Tire Distributors and TireHub have or continue to dominate the online sales category — or both.
“You may also see Discount Tire incorporate its line of tires into Tire Rack or operate it as a separate entity for a bit and strategize.”
Discount Tire markets its own Arizionian private label line.
“We will have to see what Discount Tire shows us. It does feel like a similar move to TireHub, though.” (TireHub is jointly owned by Bridgestone Americas Inc. and Goodyear Tire & Rubber Co.)
“It remains to be seen if Discount Tire will get aggressive with (its) ‘preferred installer’ mainly or only being Discount Tire stores or if they leave Tire Rack’s current algorithm and methodologies in place.” e transaction also “validates” the direct-to-consumer business model, says McGregor. And it could accelerate interest in mobile tire installation.
“I think the folks at Discount Tire are very smartly seeing (opportunities) with” direct-to-consumer business models “that are not real estate-heavy,” says McGregor.
“Not too long ago, Bridgestone invested in mobile tire operations. Who else wants to get on the bandwagon and how are they going to do it? Maybe (mobile) will now take o because other people will want to double-down? Discount Tire has some new thinking here.” So how will the deal impact other players in the market? “Smaller dealers need to be thinking about how they di erentiate themselves and it probably comes down to full-service car care,” says McGregor. “One advantage they have is that traditional (tire) dealers o er a broader range of services than Discount Tire.” ere could be “some ripple e ects” on the supply side, too, says McCarron. But the transaction “is not a resale, where Tire Rack was struggling for many years or was failing. It’s de nitely a smart move on Discount Tire’s part to go from pure brick-and-mortar to adding a distribution channel.” McGregor says more transactions involving direct-to-consumer models are not out of the question in 2022. Direct-to-consumer companies “are just valued a lot higher than traditional-model companies. It has to do with margins, at the end of the day.” Acquiring Tire Rack “is really a smart thing that Discount Tire is doing,” says Healy. “A property like Tire Rack doesn’t come around very o en. Anytime a market leader and another market leader get together, you need to pay attention.”
In this archived photo, Bruce Halle (left), the late founder of Discount Tire, meets Peter Veldman, the late founder of Tire Rack. Discount Tire nalized its acquisition of Tire Rack on Dec. 31, 2021.
Bites
Nokian adds to capacity
Nokian Tyres plc is increasing production capacity at its Finnish tire factory by about 30% by adding shifts, extending the production week to six days and hiring more personnel to build passenger car tires.
Ex-Fountain CEO dies
Brian Hesje, the former CEO of Fountain Tire and chairman of the company’s board, died on Dec. 5. He was 75. He joined the company in 1984 and served as its CEO from 1992 to 2005. He then served as Fountain Tire’s chairman through 2014. His nephew, Brent Hesje, is the company’s current CEO.
Register for TIA OTR event
The Tire Industry Association (TIA) has opened registration for its 67th Annual Off-the-Road (OTR) Tire Conference, which will take place Feb. 23-26, 2022, at the Hilton Sandestin Beach Golf Resort and Spa in Miramar, Fla. Last year’s TIA OTR Tire Conference was canceled due to COVID-19.
Sentury unveils dealer portal
Sentury Tire USA’s dealers have access to a new online portal, Access 360, that provides live, visual updates on the progress of their orders. The portal gives dealers visibility into available SKUs. They also can download account statements, process returns and submit claims.
Keter plans to speed up sales with Celerate line
Keter Tire USA plans to continue the forward momentum generated by its expanding NeoTerra line by launching a new line, Celerate, which will concentrate on high-diameter, high performance sizes.
Manufactured at Keter Tire’s plant in Thailand, the Celerate line will eventually encompass more than 250 SKUs. (Celerate will be available in 140 SKUs when production starts during the middle of the first quarter of 2022.)
The line was added “to support the demand for our products,” says Keter Tire CEO Rick Phillips. “We are really fortunate in the way our brand has grown and in how our business has taken off.”
Keter Tire launched its NeoTerra line of passenger, light truck and medium truck tires in April 2021. The company is in the process of expanding NeoTerra’s size range. “We’re selling every tire we can ship.”
NeoTerra “is kind of our broad line and Celerate has a different SKU mix,” says Phillips. “We’re going to come out with more high-end sizes” for Celerate, which will expand to include SUV and CUV fitments.
Keter Tire, whose United States office is based in Franklin, Tenn., will start accepting orders for Celerate next month.
The company sells through “about 20 or so wholesale distributors” that have multiple locations and “are good logistically and can receive containers. We don’t have a domestic warehouse. We’re very lean and efficient. That’s our whole model.
“Our target is to do business with the best distributors in each market — who have the best people, the best systems and who represent our brand well.”
Phillips says Keter Tire has “good coverage” on the West Coast, in the southeastern U.S. and in the Gulf Coast region. “The middle of the country is what we’re working on right now.”
“We have no intention of going direct to the consumer,” says Rick Phillips, CEO of Keter Tire USA. “Every tire we sell will go through distributors and dealers.”
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Bites
BKT names new U.S. leader
Discount gets exclusive tire
Discount Tire and America’s Tire are now selling an exclusive Cooper-branded light truck tire — the Cooper Discoverer HTP II. The tire also is available through Discount Tire Direct.
1-800EveryRim holds contest
In celebration of 500,000 text messages sent to its RimText service, 1-800EveryRim OEM Wheels will give $1,000 to the winner of its recently announced texting contest. The company also will donate $1,000 in the winner’s name to a select charity.
SEMA’s Kersting to retire
Specialty Equipment Market Association President and CEO Chris Kersting will retire at the end of January following a 30-plus year career with the association. Balkrishna Industries Ltd. (BKT) has appointed Doug Kershaw to lead its BKT USA subsidiary, replacing Minoo Mehta, who retired on Jan. 1 following a 46-year career in the tire industry.
A 31-year veteran of the tire, rubber, composites and track industries, Kershaw joined BKT in 2018 and has served as BKT USA’s vice president. He has expanded the company’s distribution capabilities in the U.S., as well as its presence in the construction and mining tire segments. Kershaw has ambitious goals for BKT, including “strengthening and increasing the company’s awareness and positioning in the American market.” Mehta joined BKT in 2014. e company says he created “a customer-oriented team, which helped BKT expand its market share in the U.S. in both the agricultural and OTR sectors. Brand building has been a strong focus of BKT’s strategy and Mehta’s assignment.” He will continue to serve as an advisor and consultant. Arvind Poddar, BKT’s chairman and managing director, says that it is “thanks to (Mehta) that we now have strong partnerships with our channel partners Doug Kershaw has taken the lead at BKT USA, replacing Minoo Mehta, who has and that we could see record growth. It was under Minoo’s guidance that the U.S. team achieved these retired from the company. important results.”
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Bites
Nama Tires expands
Nama Tires Inc. is expanding its manufacturing footprint in order to supply more tires to the North American market. The company says it expects to start production at a plant in Serbia next month and will ship its first container of tires from the factory to the U.S. later in the spring.
Love’s adds to Speedco
Love’s Travel Stops has opened three new Speedco locations in Tennessee, Louisiana and Florida. The facilities operate around-the-clock and offer tire, lube and light mechanical services for trucks, as well as Department of Transportation truck inspections.
TBC honors top techs
TBC Corp. recognized the 2021 ASE Master Technicians of the Year at each of its retail and franchise brands – NTB Tire & Service Centers, Big O Tires and Midas.
Hoosier gets updated logo
Hoosier Racing Tire Corp. has updated its iconic purple logo as part of its “ambitious growth plan” for the future. Owned by Continental AG since 2016, Hoosier maintains its own production facilities and has the capacity to “produce rubber for additional entities.”
Ford sets EV sales record
Ford Motor Co. says its electric vehicle sales in November grew more than three times faster than the overall electri ed vehicle market. The company sold a record number of electric vehicles that month.
GRI invests in mixing plant
Global Rubber Industries Pvt. Ltd. (GRI) is investing $25 million in its mixing plant as part of an overall effort to boost manufacturing capacity. Based in Sri Lanka, the plant will have six mixing lines, two of which are up and running.
Big O gives to teachers
TBC Corp.’s Big O brand is partnering with DonorsChoose, which helps provide resources to teachers. To date, Big O has donated more than $63,000 to the group, supporting 222 projects in 209 schools.
Thomas replaces Smallwood in top spot at SRNA
Richard Smallwood, president and CEO of Sumitomo Rubber North America Inc. (SRNA) — a Sumitomo Rubber Industries Ltd. (SRI) subsidiary — has retired.
He was succeeded on Jan. 1 by Darren omas, who most recently served as SRNA’s senior vice president and chief operating o cer.
Smallwood served as president and CEO of SRNA for 16 years, according to a statement from the company.
While president and CEO, he also served as an executive o cer for SRI. He continues to serve on the board of Sumitomo Rubber USA LLC (SRUSA).
His career with the company began in 2000, when he was hired as director of sales and marketing for Falken Tire Corp., which was later renamed SRNA.
He was soon promoted to vice president of sales and marketing.
Outside of SRNA, Smallwood serves on the board of directors of the U.S. Tire Manufacturers Association.
“During Mr. Smallwood’s tenure at SRNA, he has overseen a major transformation of the tire brand, growing it from its small presence in North America to one that now embraces a U.S. factory; multiple racing championships, including domination in Formula Dri ; and victories in numerous arenas of motorsports,” say SRNA o cials.
“In addition, SRNA has experienced tremendous growth under Mr. Smallwood’s leadership. The company has expanded its original equipment placements and fitments on leading vehicles across the automotive spectrum; repositioned a sister brand in Ohtsu tires; taken on the Dunlop motorcycle brand; built a new corporate headquarters in suburban Los Angeles; provided additional training and customer service programs for Falken retailer partners through Falken Academy; and launched dozens of new tire introductions for vehicles in every category.
“ e Falken brand has seen incredible success with its Azenis high-performance line (and) WildPeak light truck and o -road lines, as well as Ziex, WinterPeak and Sincera tire lines.”
“Our company is lled with extremely talented and dedicated people, all working together to build our business and provide our customers with quality tires that give them lasting experiences,” says Smallwood.
“It has been such an incredible honor to work here. Every day has been di erent — busy, for sure — and we have collectively achieved so many results.
“I’m proud of what’s been accomplished during my time here and I know that SRNA is in great hands with Darren taking over, as he’s been a big part of the company’s tremendous growth and expansion, as well.” omas has worked with Smallwood since 1995.
He has served in multiple sales and marketing roles at SRNA and is highly regarded for his “aggressive and analytical style,” according to SRNA o cials.
Smallwood has transitioned to chairman of the board for SRNA and also now serves as an advisor for SRI. Smallwood will continue to serve on the board of directors for SRUSA.
