Mergers and Acquisitions Why membership is declining at regional tire dealer associations

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FIRST, CONSOLIDATION AND COMPETITION – AND THEN CAME COVID-19

Michael McGregor By

The new edition of my book, “Buy, Build, Fix, Sell: Mergers & Acquisitions for Tire & Service Dealers,” is out and available for sale at Amazon.com. Since it is uniquely written for the tire industry, I thought I’d reach out to regional tire dealer associations across the country to try and schedule some speaking engagements.

I was a little surprised to discover that the years since my last book tour have not been kind to regional tire dealer associations.

While the national Tire Industry Association (TIA) is “strong and consistent” says Roy Littlefield IV, TIA’s vice president of government affairs, the same cannot be said for many regional tire dealer associations. Recently, some have merged with other auto-related groups, some are rethinking their purpose and several show little if any activity. Some have simply shut down.

Historically, the regional tire dealer associations offered several benefits. They offered an opportunity for independent tire dealers to network, socialize and learn from each other. They developed discount programs with uniform vendors, parts houses and even insurance companies for members. They provided educational opportunities and training and marshaled resources to lobby in state legislatures for things that mattered to tire dealers.

Over time, buying groups, franchise programs and tire manufacturer programs have in some cases done better jobs of offering the first three benefits. Only lobbying, if it is within a regional association’s charter, remains as the last primary benefit without competition. Most regional tire associations are organized as non-profit organizations and they are now competing with for-profit enterprises for the attention of tire dealers.

Most regional tire dealer associations have hired professional association managers or management groups that often run other industry associations. While many tire dealers are typically on the board of directors or in a rotating leadership role, the day-to-day grind of running the association is almost always outsourced. When that association manager wants to retire, the association is sometimes faced with an existential crisis. That’s when they look to merge with other groups.

Dick Nordness was the executive director for the Northwest Tire Dealer Association (NWTDA), which recently merged with the Northwest Auto Care Alliance. The merger was sparked by Nordness informing his board he was looking to retire. Consolidation in the Northwest saw NWTDA membership decline from 300 dues-paying members five years ago to 150 today. Although Les Schwab Tire Centers Inc. and Point S are members, both have their own annual trade shows and conferences they prefer their managers attend. With a steady loss of membership, attendance at the NWTDA annual trade show became a break-even event, at best. Lately, COVID-19 prevented annual meetings from even happening.

The combination last year of the North Carolina Tire Dealer Association (NCTDA) with the Independent Garage Owners of North Carolina was also initiated by the retirement of longtime executive director, Reece Hester. The newly formed Auto Service & Tire Association (ASTA) has combined into the Southeast’s largest association serving the auto aftermarket. The group adds value by lobbying, having an annual convention and sponsoring regional meetings across the state, with a focus on tech training and establishing tech apprentice programs at community colleges.

Faring more poorly when compared with those two groups was the recently disbanded North Central Tire Dealers & Suppliers Association (NCTDSA), covering North Dakota, South Dakota and Minnesota. According to Bonnie McLeary, who led the non-profit association for the last 20 years, decline was attributable to “mergers happening and people closing businesses.” After COVID-19, the group geared up for an annual conference and reached out to its 150 members, but “no one signed up”. The show was canceled two weeks before the event date due to “lack of interest.”

McLeary notes the group was stagnant and not attracting new members. For many years, “it was the same faces showing up at everything.” With “money running out,” there was never any talk about merging the group with another. “We just were not relevant anymore,” concludes McLeary.

Close to shutting down is the Arkansas Tire Dealer Association. Executive Director Charlie Edens says the group had 350 member locations seven years ago and has declined to under 100 today. At this point, there “are no dues-paying members left,” says Edens, who cites “a lack of interest among the next generation of tire dealers” in keeping the group going. With no networking meeting of any sort for the last five or six years, opportunities to show added value to members were limited.

The New York Tire Dealer Association’s Ernie Caramanico reports the organization halted dues collection and has not had events for several years because of COVID-19. With a history that dates to 1921, current membership stands at about 110, down from 250 back in the day. I asked if the group ever considered merging with the New Jersey Tire Dealer Association, but Caramanico was not aware of anybody active there. New Jersey looks shut down to me. (The New England Tire & Service Association covers a larger area and remains vibrant and active.)

The South Carolina Tire Dealers and Retreaders Association (SCTDRA) is run by Leigh Wickersham, who notes membership is down from over 100 “back in the day” to about 25 members today. The group does not have an annual conference, but half of the association’s budget is spent on hiring consultants — it can’t afford a lobbyist — to keep them apprised of legislative matters.

Determined to hang on, the Chesapeake Auto Business Association has transitioned over time from gas station members to tire dealers and now will accept any auto-related business. Down from 400 members at one point to about 70 today, the organization has no annual meeting or lobbying effort, but is planning local meetings for members and is focused on helping with technician recruiting and training.

Perhaps the person best positioned to make sense of the challenges faced by regional tire dealer associations is Chris Barry, who is both president of the California Tire Dealers Association (CTDA) and vice president of sales for the Independent Tire Dealers Group LLC (ITDG).

Barry notes the CTDA is open to anyone in the automotive aftermarket. The organization stands at about 350 members today — down about 10% over the last several years. Joining the CTDA is not an expensive proposition at $300 annually. Thirty percent of its budget is spent on lobbying.