Kneller Discusses What's Next for Sun Auto Tire
In December, the company bought three ServiceONE Automotive stores in the Houston, Texas, area. And in March 2021, it acquired Goodguys Tires & Auto Repair, an eight-store dealership based in Fresno, Calif.
In this interview, CEO Frank Kneller discusses what’s next for Sun Auto & Tire Service, which has 200 total stores, making it the sixth largest independent tire dealership in the U.S. He also explains why he is “encouraged by the resiliency” of the retail tire market and why Sun Auto views its own growth potential as “essentially limitless.”
MTD: GB Auto Service, now known as Sun Auto Tire & Service, has made a number of acquisitions since last summer - all west of the Mississippi. Will the western part of the U.S. continue to be an area of focus? Does the company have plans to enter new areas?
Kneller: Our goal is to continue our growth strategy by engaging with owners of great companies who are ready to sell, but are also looking for a respectful home for both their customers and employees to transition to. While it is true that our current acquisitions have all been in the Sun Belt and western states, our platform is not restricted to these geographies and you will see us continue to expand into new territory throughout the U.S. over time.
MTD: Will Sun Auto continue to target a mix of auto service chains and independent tire dealerships or will the company’s future mix be more tire dealership-heavy?
Kneller: Our process is less about partnering with a company based on service or tire mix and more focused on the overall business fundamentals, including store format, market dynamics and the strength of the management team.
MTD: How challenging has it been to integrate tire sales and service into Sun’s auto service chain acquisitions?
Kneller: While all transitions are hard work, our team has developed a playbook to integrate acquired businesses, which includes considering the right service mix for each store and ensuring we can provide a complete repair solution for customers. In the case of Sun Devil, that business was built as a high-velocity service model and has unparalleled brand recognition in its markets, so we view tires as a more opportunistic addition. (Editor’s note: GB Auto Service acquired Sun Devil Auto Service in July 2020.)
In other service acquisitions, we’ve been quicker to implement tires as a way to drive incremental traffic and in many cases, that is a natural transition as many of our customer managers have had experience running tire-forward stores in the past.
MTD: Does Sun Auto have a store count target?
Kneller: There are over 100,000 repair shops in the U.S., so we view store growth opportunities as essentially limitless. Our focus is on finding high-quality businesses that are trusted within their communities and fit our model and we’re complementing mergers and acquisitions with an active greenfield strategy where we see opportunities to build new locations in growing markets.
MTD: What’s your assessment of the retail tire market?
Kneller: We’ve been encouraged by the resiliency of the tire market. We think that is a validation of the non-discretionary and essential nature of the services that we offer