Tire Dealers Industry Profile

The US tire dealer industry includes about 20,000 establishments (single location companies and branches of multi-location companies) with combined annual revenue of about $30 billion. Large companies include Discount Tire, Les Schwab Tire Centers, TBC Corporation, and retail units of manufacturers Bridgestone and Goodyear. The industry is fragmented: the 50 largest companies generate about 45 percent of revenue.

COMPETITIVE LANDSCAPE

Demand for replacement tires is tied to vehicle usage, which in turn depends on economic activity. The profitability of individual companies depends on marketing, since the product is largely a commodity. Large companies benefit from economies of scale in purchasing and advertising. Small firms can compete effectively by serving a particular region, by specializing (such as in tires for high-end cars) or by joining purchasing/distribution networks.

PRODUCTS, OPERATIONS & TECHNOLOGY

Dealers sell replacement tires for passenger cars (55 percent of the market) and commercial vehicles (25 percent). The industry includes tire-specific stores, automotive parts stores, tire departments of mass retailers, and a variety of automobile service centers. The majority of dealerships are independently owned, though many are franchises or owned by tire manufacturers.

Most tires are made predominantly from natural or synthetic rubber, and may also include steel, rubber-like elastomer polymers, carbon black and other compounds, and processing oils and waxes. An average sized steel-belted radial tire for passenger cars weighs approximately 20 pounds, 16 pounds of which is rubber. A medium truck tire weighs about 117 pounds, ...