TGI Has Big Plans for U.S. Market

Feb. 21, 2023

Now in its 31st year, Tire Group International LLC (TGI) - which exports tires to more than 70 countries - has big plans for its rapidly growing business in the U.S. “You either get bigger or you go away,” says Tony Gonzalez, founder and CEO of the Miami, Fla.-based company.  

TGI’s focus this year will be growing its Cosmo brand, which offers more than 130 passenger, light truck and medium truck tire SKUs.  

“We have about 80% market coverage and now it’s ‘Where can we develop further?’” says Joaquin Gonzalez Jr., TGI’s president and Tony’s brother.  

TGI plans to add sizes to its Cosmo Mucho Macho high performance passenger tire line and will roll out a new product, Shogun R, which will be “a softer-compound tire for ultra-high performance in drift and autocross,” notes Tony.  

“We will have an R/T tire named RockIt, as well. And we are expanding our Kat Energy lineup with about 15 new sizes."  

“We’re rapidly expanding the line,” says Joaquin. “Before the end of the year, we’ll have close to 200 SKUs.”  

In addition, TGI is expanding its Cosmo medium truck tire line “with two new patterns that will offer value and performance.” They will come with a casing warranty, “as do all of our TBR tires.”  

The company will continue to ship out of its three distribution centers - one in Miami; one in Tampa, Fla.; and another in Portland, Ore.  

Global reach 

The Gonzalez brothers are third-generation tire dealers. Their grandfather, Antonio Gonzalez, and his brother, Felo Gonzalez, owned a prosperous tire dealership in their native Cuba before Fidel Castro came to power.  

 “My father, Joaquin Gonzalez Sr., developed a wholesale tire business” after the Gonzalez family emigrated to the U.S., says Tony.  

“At one point, he also had 13 retail stores in Miami,” which were phased out in the 1980s when Joaquin Sr. moved overseas to pursue other business opportunities.  

Tony, who had grown up in the family business and had worked for some other tire wholesalers and exporters, formed a partnership with a family friend, Augustine Herran. In 1992 - at the age of 22 - he started TGI “out of my townhouse. “ 

We started off as brokers,” says Tony. “Back then, the business was more deal-centric. There were a lot of close-outs.”  

TGI established the Cosmo brand in 1995. “We needed something we could control and was our own,” says Tony. “We could give exclusive territories and didn’t have to depend on someone else.”  

Tony and his partner had made contacts around the world. They soon contracted with a manufacturer in China to build Cosmo brand tires. “We invested in some bias light truck and medium truck tire molds. We started with that.”  

Next came the task of developing TGI’s network of customers. “One of our philosophies has always been, ‘Let’s find small and mid-size guys and grow together,’” says Joaquin Jr., who also grew up in the business.  

Tony remembers visiting a customer in Central America during TGI’s early days. “I was made to wait to meet with the head guy there for an hour-and-a-half. I eventually met with him. We needed the business.  

“But I said to myself, ‘This isn’t the way to go. I’m nobody to this guy. I need to find other small guys and medium-sized guys who need me as much as I need them.’”

Some of TGI’s customers “started with nothing,” says Joaquin Jr.  

“We met our Cosmo dealer in Puerto Rico at a trade show nine years ago. He started by buying two pallets of tires from us. Today he buys between 12 and 14 containers a month.  

“We gave him a line of credit. We gave him a product for his market. And we gave him a brand that nobody else in his area has.”  

At one point, TGI was the biggest U.S.-based exporter of tires to Latin America in terms of units, according to Tony. At the height of its export business, the company shipped tires to “every single country” in Central and South America, plus all of the Caribbean.  

“We had offices in the Dominican Republic,” says Tony. “We had offices in Argentina, Panama and Nicaragua. We had three warehouses in Columbia. We had trucks. We were running routes.”  

Meanwhile, TGI branched into other parts of the world, including Africa and the Middle East - often using “in-country agents” who knew local markets and could help the company build a presence quickly.  

“We’ve had offices in Africa,” says Joaquin Jr. “In 2013, we acquired a company that gave us products we didn’t have,” including OTR tires for mining applications. “So we went ahead and opened an office in Ghana. We even hired a sales agent in South Africa.”  

“If you find someone who’s an expert in a particular area and you have the right products, you can succeed,” says Tony.  

The company maintains a busy export business. It shipped to more than 70 countries in 2022. “When you do business in so many countries, what happens is when you step back, you see opportunities within opportunities,” says Tony.  

TGI also has been opportunistic when it comes to expanding its footprint in the U.S.  

“One gentleman who had worked with us for a while” decided to relocate to Oregon. “He said, ‘I want to open a warehouse.’ We said, ‘Sure. No problem.’ We backed him financially.”  

TGI’s Portland, Ore., distribution center opened in 2017. The company’s Tampa distribution center, which serves local customers, opened in May 2020. “We do about a 250-mile radius, where we distribute to retailers - twice a day and once on Saturday - using our own trucks,” says Tony.  

Taking stock  

TGI accomplishes the above with a staff of 102 team members, according to Tony - many of whom have been with the company for decades.  

“We’re very efficient and very automated,” he says. “We invest hundreds of thousands of dollars - if not close to a million dollars - a year in IT and infrastructure.

“Our warehouse management system is paperless - from order placement all the way through delivery.  

“About 70% of our orders come through our web portal. Customers don’t need to call us anymore, so that frees up our sales team to open new business.”  

Over time, TGI has become adept at working through the ebbs and flows of importing and exporting tires, according to Joaquin Jr. That includes navigating shipping issues that have plagued the tire industry over the last three years.  

The dramatic spike in freight rates after COVID-19 struck “hit us hard,” says Joaquin Jr.

“Forget what you were buying a tire for in Thailand, Vietnam or wherever. When we went from an average of $3,000” per container “and it ballooned up to $21,000 per container - that’s a huge difference!”  

The rapid decline in freight rates during the second half of 2022 presented its own set of problems, says Joaquin Jr. 

“The increase (in freight rates) took 20 months. The drop took six months. When the music stopped and it started to drop, it was double the pain because now you have inventory at a very high price - and not because you bought it wrong.  

“You bought it at the right price because pricing at the factory hadn’t changed. But you paid $70 to bring it in and now it costs $18 a tire.  

“There’s a glut of tires right now. I call it ‘inventory indigestion.’ Everybody is stuck with a lot of inventory.”  

TGI is working to draw down its inventory levels and is helping customers - including tire retailers and smaller tire distributors - do the same.  

“You have a lot of small guys who didn’t accumulate a lot of inventory on the way up and didn’t enjoy record profits,” says Tony. “But on the way down, they’re moving inventory a lot quicker.  

“The guys with massive inventories can’t move that stock as quickly, so they have no choice. If the smaller guys are setting the bar, you have to bring your prices in line with the market. If not, they’re going to sell all the units.  

“The bottom line is you have to take it on the chin, you have to adapt, you have to write down your inventory and you have to move on.”  

“The relationships we have overseas are still very important to us,”says Joaquin Jr. But selling internationally “is tougher sledding” than developing domestic business right now.  

“Macroeconomic issues are making it tough to sell into international markets at the moment,” he adds.  

Pressure relief 

 In the U.S., TGI has a “national sales” division. “Our core business there is factory direct sales to other wholesalers,” who in turn sell Cosmo brand tires within exclusive territories, says Tony.  

Cosmo tires are sold in more than 35 U.S. states, he adds.  

“We’re really focused on serving the independent tire dealer,” explains Joaquin Jr. “The size proliferation in the market today has multiplied at a rate that doesn’t allow retailers to stock all they need.”  

Major tire manufacturers “also are under pressure from the tier-three (manufacturers), who continue to gain market share,” he continues. “A lot of tire dealers out there are saying, ‘Why should I be tethered to only one brand?’  

“At the end of the day, if you have three good choices, which one are you going to pick? The one that’s going to give you the most margin, the one that gives you exclusivity and the one that gives you the support.  

“That’s where Cosmo comes in. It’s a brand we know we’ll have today, tomorrow and the day after.  

“Our customers also are dealing with a U.S.-based company and people who have the patience to develop a mutually beneficial relationship. It’s so much more fun that just selling a price.”  

“Not all customers who have that one store and have been in a neighborhood for x number of years and have a dedicated clientele are necessarily the right guys to buy from the bigger guys who say, ‘You have to be on a program. You have to buy so many units,’” says Tony.  

“There are customers who want something that’s their own and can make that extra margin.  

“Our biggest focus is on growing the Cosmo brand and continuing to do what we started a few years ago, when we said, ‘We’re really going to build the brand in the U.S. and we’re going to develop the breadth of line needed for the U.S. market,’” says Tony.  

“Our focus is on growing Cosmo and investing in Cosmo and continuing the marketing of Cosmo to differentiate us in tier-three. And we’re having fun doing it.  

“We’re kind of an irreverent brand,” adds Tony. “We don’t talk to our customers corporately. We talk to them casually. You don’t always see that in our industry.”  

About the Author

Mike Manges | Editor

Mike Manges is Modern Tire Dealer’s editor. A 25-year tire industry veteran, he is a three-time International Automotive Media Association award winner and holds a Gold Award from the Association of Automotive Publication Editors. Mike has traveled the world in pursuit of stories that will help independent tire dealers move their businesses forward. Before rejoining MTD in September 2019, he held corporate communications positions at two Fortune 500 companies and served as MTD’s senior editor from 2000 to 2010.