ATD outlines plans, including supplying GM dealers and moving away from private label tires
Supplying tires to 3,700 General Motors (GM) dealerships throughout the country is just one of American Tire Distributors Inc.'s (ATD) initiatives for 2005.
ATD recently announced in its 10-K Securities and Exchange Commission filing that it has entered into tire supply agreement with GM.
Participating dealerships will be serviced "by our existing distribution centers and are not expected to require any additional truck routes," according to ATD officials.
ATD also plans to:
1. Focus on higher profit products. "We plan to continue to focus on increasing the mix of high and ultra-high performance tires in our product line and on shifting customers from private and associate brands to flag brands, which provide us with a higher profit per tire."
ATD officials also say they are working with independent tire dealerships, car dealerships and specialty shops to boost sales of custom wheels and tire and service equipment.
Passenger and light truck tires accounted for nearly 75% of ATD's total net sales in 2004.
2. Capitalize on profit enhancement opportunities. "We are in the process of further enhancing our pricing discipline and expense controls through a strategic segmentation of our customer base. This initiative provides incentives for smaller customers to provide us with a larger share of their business and focuses our sales efforts on larger, more profitable customers."
3. Selectively pursue acquisitions. "We believe we are well-suited to capitalize on opportunities to acquire smaller companies with key customer relationships."
ATD's acquisition strategy "consists of increasing our share in existing markets, adding distribution in new or complementary regions and ultizing our scale to realize cost savings."
While ATD continues to evaluate potential acquisition targets, "at this time, we are not party to any definitive agreement for any such acquisition."