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Tire Factory: Dealer owned and operated

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Tire Factory: Dealer owned and operated

Northwest Tire Factory LLC is truly built from the bottom up in the western United States. The 154 independent dealers who make up the would-be cooperative run the show, and CEO John Kreidel — a non-dealer — wouldn’t have it any other way.

The $100 million organization is made up of 211 stores, four of them added this year. Its short-term goal is to add 25 stores in 2013, and reach 300 by the middle of 2015, said Kreidel. The group added 28 stores in 2012.

Bob Tate, director of sales and marketing, told dealers at the recent 2013 Tire Factory Annual Meeting in Portland that Denver “is where our expansion efforts are being placed.” Tire Factory rents a distribution center in Denver and owns D/C’s in Salt Lake City and Portland.

Controlled growth, especially eastward, is the key, he said. “Kansas is our next logical step, heading down I-70 from Denver. But that’s a long-term goal.”

Goals in 2013

Company executives were transparent about their 2013 goals. They include the following.

1. Use group purchasing power to ensure lowest pricing for members by reducing cost of goods by at least $400,000 in 2013, “and add resources to the procurement function,” according to Kreidel. Steve Helstrom, director of operations, told attendees that low-cost radials are part of this strategy. “We have to do everything we can to hunt down that new bargain,” he said.

2. Enhance the customer website to improve member growth and efficiency. That includes improving pricing capabilities (see sidebar). Helstrom added that Tire Factory suffers from too few IT solutions for its members.

3. Change Tire Factory’s legal status from an LLC to a C-Corp cooperative for tax purposes. The move would help the dealers in all 14 states in which Tire Factory has outlets, especially California. A 75% vote for the change is required from all the members.

4. Be very focused on VIP brands. Of its VIP consumer tire brands, only Nokian is exclusive. As a result, significantly increasing Nokian unit purchases is a group priority. That includes a 40% increase in Rotiiva and EnTyre sales. The VIP brands also include Goodyear, Dunlop and Kelly from Goodyear Tire & Rubber Co. — the only tire company that has been with Tire Factory since it was formed in 1987 — plus Hankook, Yokohama and Cooper. The group added Yokohama medium truck tires to its mix in 2013. “It’s important for this organization to align itself with brands,” said Kreidel.

Road hazard warranties

The group’s “Best in the West” road hazard warranty is even better. For 2013, it has been split into two levels: Gold and Platinum.

The “Good as Gold Warranty” is similar to the original warranty. It provides free tire replacement, including installation, for the first 30% of tread life within the first three years after purchase. Coverage for the remaining tread wear down to 2/32-inch is pro-rated.

Free air checks, tire inspections, tire rotations and flat repairs are also included in the coverage.

The “Platinum+ Warranty” is designed to be sold as an add-on. In addition to all gold warranty coverage, it provides free tire replacement for the first four years of purchase, plus free balancing, tire pressure monitoring system resets (as part of the tire rotation) and alignment checks (every 15,000 miles).

Both warranties are honored at any Tire Factory location.    ■

‘Leave the pricing to us!’

The question, offered up by Bob Tate, director of sales and marketing for Northwest Tire Factory LLC, was pretty direct. “Is common suggested retail pricing right for your store or your zone?” he asked.

The answer from Tire Factory members also was direct: “No.” That especially applied to selling online.

“We like the freedom to set our own prices,” said one dealer.

The hands-on workshop was all part of Tire Factory’s attempt to support the selling strategies of its members, who liked the idea of receiving competitive pricing data.

 

 

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