Improved profitability on tap for 2008, says Saul Ludwig

Jan. 7, 2008

"The tone was surprisingly upbeat, even as oil marched toward $100 a barrel," analyst Saul Ludwig reported after attending the 2007 Specialty Equipment Market Association (SEMA) Show.

In his lastest installment for the Ludwig Report in Modern Tire Dealer magazine, Ludwig says, "Dealers complain of poor fill rates from suppliers and rising tire costs, while intensified retail competition has led to a lower gross margin per tire sold. On the other hand, auto service business has been strong -- and very profitable.

"Manufacturers struggle to meet tire demand -- especially for 18-inch and larger tires. Imports continue to pour into the country.

"Considering all the plusses and minuses, I continue to expect improved profitability for both dealers and manufacturers in 2008."

Ludwig is a managing director with KeyBanc Capital Markets Inc. based in Cleveland, Ohio. Look for the full "Ludwig Report" in the next issue of Modern Tire Dealer magazine.