Last month, I wrote about how commercial tire dealer profits can sometimes be lower, on average, than retail tire dealers’ profits. I boiled it down to the fact that whoever owns or controls the customer relationship has the power to call their own shots.
In times like these, we learn the business lessons that stick with us for the rest of our lives. One lesson I think we’ll see is that the tire dealers who kept all of their technicians and best sales people employed during the pandemic will recover faster than those who did not.
I run across a lot of 50-year-old tire dealerships that have a mix of businesses, like the retail tire dealership that opened a warehouse to deliver tires to its stores and then started wholesaling to get more volume, better pricing, and more cash profit.
What is managed care? It's different from “fee for service.” It involves a contractual arrangement with your customer to provide all maintenance and repair needs for a vehicle over a two- to three-year period.
Here’s a little history lesson for the young people. Bridgestone Corp. was not always the largest tire company in the world. The acquisition of Firestone Tire & Rubber Co. in 1988 helped make it the largest.
Sophisticated buyers want to know everything about your business before acquiring it so they can be responsible to their shareholders and investors, as well as plan for an effective integration after the sale closes.
With the combination of private equity-owned Mavis Tire Supply Corp. and Express Oil Change & Tire Engineers (Express Oil Change LLC), it’s a good time for tire dealers to understand how private equity plays the acquisition game differently than strategic acquirers like Monro Inc.