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‘Go east!’

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‘Go east!’

In the 1800s, “Go west, young man!” was a famous expression. This year, the Independent Tire Dealers Group LLC (ITDG), until recently a western states-focused organization, is going east.

ITDG’s eastward expansion began in April, when it added Ronnie Ward Tire Co. Inc. of Monroe, Ga. The distribution group plans to sign more dealers throughout the mid-south and southeast, ITDG CEO and President Michael Cox said during ITDG’s annual member meeting, held last month in Palm Desert, Calif. (ITDG currently has 109 members who represent more than 300 tire and service center locations.)

“Now that we have a foothold in the southeast, we have a reason to go there. We’re not going after the one-bay or two-bay corner gas station or the used tire guy. We’re looking for strong independent tire dealers. Our members’ numbers per location average between $1.5 and $2 million on an annual basis, and some of them are higher.”

Cox said ITDG’s tire vendors support the group’s expansion plans and will even work with it to sign new members. “We’re going to travel with them and call on prospective customers.”

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One advantage of ITDG’s program is that it can run “concurrently with other programs out there,” said Cox.

“We have Goodyear Gemini dealers who are ITDG members. We have (Bridgestone Firestone) TireStarz members, Big O dealers... the way we’re set up, there’s really no requirement as far as in-house share. The only thing we have is a minimum annual purchase. Some people choose to buy all of their auto parts through us, others choose to buy certain tire lines, etc.”

Persuading members to buy more merchandise through ITDG is one of the group’s goals. ITDG posted record gross sales of more than $96 million in 2007 and is targeting $100 million for 2008.

“We can do so much more,” said Cox. “We have guys who are buying 90% of their business requirements — the things they need to run their businesses — through us, and we have members who are buying maybe 10%. If we can move that 10% to even 25%, our growth would just take off.”

ITDG also is putting together a new equipment leasing company, ITDG Financial LLC, for its members. Through several different payment plans, ITDG will lease shop equipment to members of the company. (Any ITDG member can become a shareholder at $20,000 per share with a maximum of five shares per person.)

“The idea is not only will we offer equipment, we’ll now have a venue for people to purchase equipment,” said Cox. “Why tie up your own money when you can use someone else’s?”

The company’s offerings eventually will be expanded to include inventories. “We’ll buy inventories and sell them back to our members. Their collateral will be their stock in ITDG, the volume bonus they earn and their dividend as a shareholder. We’ll also pay them 4% on their leasing payments, and we’ll offer them very competitive rates.”

Adding members to ITDG’s captive insurance company, the Independent Innovative Captive Insurance Co., is another priority, said Cox. This year, the captive declared a 10% dividend for its first-year shareholders. General insurance rates are down at the moment, Cox noted, but when they increase again, he believes joining the captive will be a particularly attractive prospect.

“I would anticipate us picking up the pace with new members in about 18 months,” he added.

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