Some of the country’s largest commercial tire dealerships are reporting a down or flat market in 2024. Lingering inflation, election results and possible tariff determinations also are creating uncertainty among dealers and their customers.
Top executives from three of the biggest commercial tire dealerships in the United States recently sat down with MTD to discuss the challenges their companies are facing and what they expect next year to be like.
Carson Wright, executive vice president, Nebraskaland Tire Co. Inc., dba Nebraskaland Tire, Kansasland Tire and Coloradoland Tire and McWhorters Tire and Service: “This has leveled off a little bit, but we are really having trouble finding good, after-hours and service truck technicians. We’ve got a really good team right now, but we could use more for sure, and we’re in smaller communities where it’s hard to find help. It’s hard to find guys who are willing to do the after-hour calls and we would be in a lot better shape if we could have 20 more of those guys.
“We have ads out everywhere to try and recruit more people. We throw a lot of money at this, too ... to try and incentivize these guys. But a lot of them just don’t want to do it or they say they’ll do it and then change their minds when they have to wake up at 2 a.m. in the middle of February.
“Demand is also really soft. We need to get demand back and get the fleets back on the road. Most of our stores are in the agricultural market and right now, the ag economy is pretty soft and that drives almost everything here, one way or another. If there’s no grain to cut, the farmers can’t produce anything, so there ends up being no grain to haul and less commodities to move so the drivers aren’t getting paid as much. This all trickles right on down to all the families that are supported by the farms.
“In the last month or two, we’ve maybe seen a small tick-up in the commercial tire market, but overall, it’s still down a lot compared to last year in our part of the world. Our profit percentage is up this year, but our units are down quite a bit. Profitability-wise on commercial tires, we are about even with units down and gross profits up a little bit — which was maybe by design, but units are definitely off. That’s just because of soft demand. There’s just not as many trucks on the road right now.
“I wish I had a crystal ball to know what next year will be like, but I think we are preparing for a year that is very similar to this one. It’ll probably be flat compared to this year. We’ll adjust on the fly if we have to, but I think when the election is over, maybe people will be a little bit more comfortable with what’s going to happen and we will start to get a better idea of what is going on. A lot of people are in a ‘wait-and-see’ mode.
“You also have the Farm Bill this year that plays a big role in our economy here in this part of the country. The two sides have different ideas on what that bill should even look like. So the people in the farming economy kind of sit there with their plans on hold until they get an idea of what is going to happen moving forward.
“With the softer markets, we have seen an uptick in demand for tier-three and tier-four tires. Most of those are container-load stuff and it’s all built off-shore, so we have to order factory direct. I would like more of that stuff to be warehoused domestically. Then we wouldn’t have to order our units 90 days out and play a guessing game of what we’re going to need by then. We are also very spread out as a company.
“Our stores are about 60 to 70 miles apart. So, if you’re bringing one container or two or three containers into one spot, you have to move them all over the place to hit all our locations. Inflation has caused transportation costs to be higher than normal. Fuel prices are down a little bit, but it’s still a bit cost-prohibitive to move all that stuff around. So if we can get it shipped right to our stores, that would be great.
“General inflation is really hurting and impacting our business. Everything just costs more now than it did three to four years ago. That has kind of bogged everything down a little bit — us included.”
Brian Chase, president, Rice Tire Co.: “The labor market, for us at least, has really steadied out some and we’ve been able to increase our tenure or length of employment, which has been great.
“From the sales side, the biggest challenge(s) (are) the imports and the fluctuation in pricing and pricing surcharges, especially how imports undercut retread pricing and how it affects domestically-made commercial tires. So on the sales side, it’s really been a tough balance of how low these imports have gotten compared to the tier-one tires or retreads and finding that right mix that works for our customers and us.
“Operationally, our biggest challenges are (that the) costs of operations keep going up faster than the revenue and profit you make as a tire dealer, especially if you rent your locations. Any building you don’t own is going up much faster than the profits made at that store. And insurance — whether its health insurance for employees, business insurance or vehicle insurance — that’s all taken a huge increase in the last couple of years. The cost of doing business is currently rising at a rate as fast or faster than the profit you’re making running the business.
“For us, the market is slightly down. We have a lot of construction (business) in our area that’s quiet. They’re not building houses, warehouses or anything else at nearly the rate they were a couple of years ago. So a lot of that has slowed or dried up business.
“Freight (rates) have been up and down. It looks like it’s starting to pick up a little bit again.
“Next year will be very interesting. I’d be surprised to see things take off again and make a u-shape or vertical take-off. If I had to take a guess, the market next year will be flat, but we are going to prepare ourselves to be mobile enough to tackle it — whichever way it goes.
“Outside of getting more customers, I would like to see more stability in tire pricing. We’re starting to get towards that, but they’re talking about tariffs from Thailand and they put out an initial (application) of a pretty small tariff, just 2% or 3%, which won’t really change much. But in a perfect world, I’d like to see the tires priced to tiers, the way they should be.
“We have definitely noticed a trend in (customers buying) lower-tiered tires. More customers are coming in and asking for the lowest-priced tire we have to offer. It’s definitely a tougher challenge to up-sell right now than it has ever been.”
Joe Zaccheo, CEO and president, Sullivan Tire Co. Inc.: “Certainly (recruiting) employees or finding help is a concern. It seems like the younger demographic isn’t interested in coming into the tire business. It’s highly labor intensive. We do fine with hiring people and bringing people in. It’s just once they see what the job is like, they don’t stay a long time.
“With our newly formed ESOP (employee stock ownership plan), we are projecting our employee retention rate to increase substantially.
“We did add three new locations this year. (Editor’s note: See sidebar on page xx for more details.) That has been a challenge for us to assimilate a different employee (base) and customer base into our portfolio, but we did it. We made the transaction in June and a couple months later we got it going pretty well. We had to upgrade some equipment and needed to upgrade service trucks to help with the transition.
“Another challenge just from running the company is (our) medical plan. The high costs of providing a robust medical plan are a challenge. As the rates go up, claims go up. It all ties into inflation and the health insurance industry has seen a lot of inflation, as well. So now we are caught between balancing a reasonable contribution from our employees and trying to combat the high increases in the amount of claims we are paying.
“We have brought in a new benefits consultant, and they’ve helped us go out to the market on our prescription program or pharmacy benefit provider. So we’ve gone out to market with a new primary pharmacy benefit provider, as well as offering a life insurance plan, short- and long-term disability and a vision plan. They also helped us run a request for proposal (RFP) process for the providers we had been working with and when you do an RFP process, low and behold, the rates come down. So that was a really good initiative for us.
“Overall inflation is just a challenge. The government says it is coming down, but it doesn’t feel like it. We are trying to operate as effectively as possible and that’s how we’re going to combat inflation.
“We are also a Bridgestone/Bandag retreader and we have two retread plants. For the national fleets, that is a good service to provide. But for the local fleets, sometimes they tend to buy their tires from overseas or (they buy) other imports. A fleet can purchase imports at or below the price we can offer a retread. This is somewhat typical. Something will change. There will be some dynamic in the marketplace where the import price will come back up and then the retreads will be a more economical option for local fleets. But we’re not there yet.
“We would always like to see the national manufacturers looking at their national account service rates because we’ve had quite a big wage escalation just to keep a workforce. So, we would look for some help from the manufacturers to look at their labor rate programs or commissions and look to increase those which would be a help for next year.
“The current commercial tire market is kind of choppy. We’re up a little bit in sales this year and in units. Overall, business was very strong in 2023 for us. I expect the commercial tire market next year to remain kind of choppy. I expect to see minimal growth in the industry — around 2% or 3%.
“We certainly are going to look at adding to our footprint next year. We know there’s some consolidation going on and we’re a good exit strategy for some dealers. We’ve added five locations in the two or two-and-a-half years and we would like to continue growing. Certainly the economy settling down would help. Once we get through the election periods, we hope to see some stability in the economy.”
More activity
Despite the various challenges listed above, some of the country’s largest commercial tire dealerships have grown through acquisitions, relocations or the addition of new facilities in the past year.
In October 2023, Bethlehem, Pa.-based Service Tire Truck Centers Inc. (STTC) acquired Giant Tire Service of Hawthorne, N.J. This deal gave STTC eight locations in the New Jersey area. At the time, Walt Dealtrey, president and CEO of STTC, said Giant Tire Service "has been widely recognized for its exceptional truck and earthmover services" for decades. He said the acquisition was "an ideal match for both organizations."
The deal brought STTC to 54 total locations throughout the Mid-Atlantic and Northeast.
In November 2023, Rice Tire Co., opened a new commercial truck tire location in Camp Hill, Pa. The new outlet features three bays and is 9,000 square feet. It's the company’s 13th location.
In March 2024, truck stop chain Pilot Flying J announced plans to open 30 new Southern Tire Mart at Pilot Flying J locations within the next year. Southern Tire Mart at Pilot Flying J is a joint venture with Columbia, Miss.-based Southern Tire Mart LLC, the biggest commercial tire dealership in the U.S.
"We are very excited about our partnership with Pilot and the opportunities moving forward," said Tommy Duff, who, along with his brother, Jim Duff, owns Southern Tire Mart. (The Duffs were the recipients of MTD's Tire Dealer of the Year Award in 2021.)
Southern Tire Mart and Pilot Travel Centers joined forces in January 2021 to establish the Southern Tire Mart at Pilot Flying J network.
Wilkes-Barre, Pa.-based McCarthy Tire Service Co. Inc. made two big moves in the commercial tire world this year. In April 2024, the company unveiled a new, in-house commercial wheel refinishing facility, which can process more than 1,000 wheels per day.
The facility, which is located in Wilkes-Barre, features new technology and eco-friendly processes to deliver wheel restoration. Trained technicians utilize new equipment for inspections, surface preparation, pre-treatment and automated coating.
“This investment reflects our dedication to providing our customers with unparalleled efficiency and a one-stop shop for all their commercial tire and wheel needs,” said John McCarthy Jr., president of McCarthy Tire & Service, who was MTD's Tire Dealer of the Year in 2019.
Then, in June of this year, the company relocated its Williamsport, Pa., location to a larger facility. Given the larger footprint of the new facility, McCarthy Tire & Service has closed its old Williamsport location.
Sullivan Tire Co. Inc., expanded its footprint by buying the assets of seven Stratham Tire locations. The stores are in Bangor and Auburn, Maine, Portsmouth and Brentwood, N.H. The acquisition was announced in May of this year and the new locations opened under the Sullivan Tire name at the beginning of June.
All the newly acquired locations continue to provide complete auto service, while the Bangor, Auburn and Brentwood outlets also offer commercial truck service and products.
Employees at the Stratham Tire locations had the opportunity to stay on as Sullivan Tire employees, "maintaining the local relationships that have been established in the area,” according to Sullivan Tire officials.
