A relatively quiet business for many years, Turbo Wholesale Tires is making waves.
With the backing of investor Kingswood Capital Management, the Irwindale, Calif.-based company, over the past few months, acquired Tire Wholesalers Inc. (TWI), a Michigan-based distributor with locations in its home state, plus Chicago, Ill., and Salt Lake City Utah; added to its Lexani line; became an approved vendor for the Independent Tire Dealers Group LLC; and announced eight new tires, four of which are available now.
In this MTD exclusive, tire industry veteran Phillip Kane, Turbo Wholesale Tires’ CEO, discusses the company’s recent moves and overall strategy. “We have plans to continue to grow, as we have a strong desire to make our brands and products more accessible to more consumers,” he says.
MTD: Why did Turbo acquire TWI?
Kane: The combination with TWI presented an opportunity to benefit both businesses’ customers in a meaningful way. It resulted in an expanded brand and product offering, additional channels and points of distribution, increased scale and purchasing power, a broader set of skills and experience and a more well-rounded management team. (Editor’s note: Ross Kogel Sr., who founded TWI, is now serving in an advisory role, while his son, Ross Kogel Jr., is chief operating officer.)
The core competencies and operating strengths of the two companies are highly complementary, which is going to make for a better experience for all our business partners. Additionally, the opportunity to move our Lexani, Lionhart, and Rolling Big Power brands closer to so many more consumers in the Midwest was attractive to us.
Most importantly, the cultures of the two businesses fit so well together. The Kogel family believes, like I do, that one need not choose between winning and treating people with kindness. So often in these large mergers, a tremendous amount of time is spent working through cultural differences and people issues. We don’t have any of that and I am proud of how well both organizations have embraced one another and come together as a single, unified team.
This is going to allow us to get through the integration of the businesses far more quickly than what is usual, which will accelerate the pace at which our customers, vendors and associates benefit from the combination.
MTD: You have a long history in the tire industry, in the past holding executive roles at different tire manufacturers. Why did you decide to do this?
Kane: I saw this as an opportunity to help build something different than what we have seen historically in the distribution space and to be able to do it with like-minded partners who I have incredible respect for in Kingswood and the Sepetjian family. (Note: Sarkis Sepetjian, who founded Turbo in 1983, and the Sepetjian family have retained significant ownership in the company.)
MTD: You mentioned building “something different." What do you mean by that?
Kane: With all due respect to our large counterparts that have been consolidating the tire wholesale space, we don’t aspire to be like everyone else – just another tab on the screen at the shop counter.
Our focus is on adding value to our customers’ businesses. We’ve made significant investments in our product portfolio, as well as our people, processes and infrastructure, to allow our customers to make higher profits and to serve them how and when they want. We’ve grown our unit volumes and share considerably in our first six months as a result and plan to keep listening to what our customers have to say.
MTD: There's been a lot of consolidation in the wholesale channel. Why are we seeing this and what opportunities does this create for Turbo?
Kane: Like most large and highly fragmented industries, once consolidation begins, there is a long runway and the benefits of scale attract capital which drives more activity. That said, we think the opportunity is a little bit different for Turbo, especially given its own brands. While we want to expand into new geographies, add additional third-party brands to our portfolio and generally realize the benefits of more scale, we are also really focused on expanding our own product offering across the full breadth of categories, sizes and fitments. We are excited about our growth and look forward to better helping our customers run successful businesses and reaching more consumers.
MTD: As Turbo considers more acquisitions in the future, is the plan to stay within the wholesale channel or are you also open to retail/commercial acquisitions?
Kane: We know what we are good at and at least for now, we are really focused on the wholesale space. We want to continue to add products, brands, capabilities and points of distribution that add value for our customers. As an owner of multiple brands, we also want to continue to introduce new products that consumers want and we want to bring those products to market really quickly.
MTD: Are you focused only on your own brands? What about other brands?
Kane: Our own brands will continue to be our primary focus because we are able to determine what we bring to market; the construction, performance and appearance characteristics; and ultimately, the relationship with our customers and the end consumers. Through our own brands, we can give our customers high-performing products at an attractive price point, which allows them to both sell more tires and make higher margins.
That said, we also very much value the relationships we have with our third-party brand partners. There is absolutely a place for other brands in our business. Ultimately, our goal is to make life easier for our customers and our customers sell a lot of branded tires to end consumers. Further, we won’t simply take on brand partners for the sake of having a brand. We seek to partner with brands we value and believe we can lift in the geographies where we operate.
MTD: What’s next for Turbo? Are more acquisitions in the works?
Kane: First and foremost, our current focus is on completing the integration of Turbo and TWI as smoothly as we can to not disrupt any of our customers, vendors or associates and to ensure we are delivering the benefits of the combination to all these important constituencies as quickly as possible.
Going forward, we have plans to continue to grow, as we have a strong desire to make our brands and products more accessible to more consumers. We expect to do that both organically, as well as through additional acquisitions.
I think it is safe to assume that our brands will move up the value tier across all categories. We are adding more than 300 new SKUs in 2023 alone, which is a pace of product introduction that we are proud of. We will be launching a new associate dealer program later this year that we are excited about and we will continue to align with significant voices in the industry like you saw us do with West Coast Customs. (Editor’s note: This past May, Turbo became the official tire provider to West Coast Customs, a Burbank, Calif.-based company that customizes high-end vehicles.)
MTD: What’s the story with the West Coast Customs relationship?
Kane: Ryan Friedlinghaus at West Coast Customs chose to partner with Turbo as an official tire supplier to their business. This is a big deal. Ryan and his team build custom vehicles for some of the most influential people in the world. That he is using Lexani and Rolling Big Power tires on those builds should tell consumers a great deal about the performance and quality we deliver in every tire we bring to market.
MTD: In addition to Ross Kogel Sr., I understand that Sarkis Sepetjian, Turbo’s founder, is still with the company…
Kane: Both Sarkis and “Senior,” as he’s known to us, still show up to work each day. They are both shareholders in the business and advisors to me. I love having them around. I look up to both and learn from them every day.
