"Several years ago I had predicted that pure tire distributors would lose market position as retail consolidation would drive more business direct with the manufacturers. That prediction has not proved to be one of my best," says analyst Saul Ludwig in the July installment of the "Ludwig Report" in Modern Tire Dealer magazine.
"The dramatic tire size proliferation has made the distributor much more valuable as no retailer can stock the myriad of product choices. The best example is American Tire Distributors (ATD), the largest tire distributor in the country. ATD had impressive volume growth of 14% (excluding acquisitions) in 2007 and 3% in 1Q08. That’s strong growth in what has been a very sluggish market," Ludwig says.
"There certainly will continue to be a key role for wholesale tire distributors in the U.S.," Ludwig predicts.
Ludwig is a managing director with KeyBanc Capital Markets Inc. based in Cleveland, Ohio. Look for the full "Ludwig Report" in the July issue of Modern Tire Dealer magazine.
