Not long ago, the share of the replacement tire market held by new-vehicle dealerships was near zero. Dealers seemed to concede the space to independent shops.
That has changed, big time.
Last year, new-vehicle dealerships accounted for a record 8 percent of the $29.2 billion U.S. market in replacement tires for cars and light trucks, up from 1 percent in 2000, according to the trade publication Modern Tire Dealer.
Rising new-car sales and efforts by automakers and distributors have helped fuel the surge. And now, franchised dealers are seeking to build on the gains by betting that cutting-edge service lane technology will spur even more sales.
Bob Ulrich, editor of Modern Tire Dealer, predicts the share could rise to 15 percent in coming years.
"One-half percent [of annual market share growth] is significant in our industry," Ulrich said. It's a "huge red flag" to retail competitors, he added.
Scott Mueller helped set the trend. He is CEO of Dealer Tire, a Cleveland distributor that sells replacement tires to new-vehicle dealerships and helps dealers with merchandising and marketing.
Mueller formed Dealer Tire in 1999, a year after the tire shop founded by his grandfather secured a contract to supply Mercedes-Benz dealerships nationally. Three years later, the retail operation would be sold, leaving a reinvented family company to focus on selling to car dealers.
Today, Dealer Tire contracts with 15 automakers that operate 23 brands. It sells tires to more than 10,000 franchised dealerships in the United States and Canada. Its 42 distribution centers can deliver tires to most dealerships twice a day, so dealers don't have to tie up capital warehousing large tire inventories.
Mueller notes that the large number of cars and light trucks sold in the United States since the Great Recession -- 97.1 million from 2010 to mid-2016 -- is fueling a growing market for replacements.
"Dealers have tremendous potential," Mueller said. "All these vehicles that were sold in the last five years are going to need tires in the next two or three years. There is so much upside that hasn't been reached."
Last year, tire manufacturers shipped 235.5 million replacement tires for U.S. cars and light trucks, reported Tire Business, which, like Automotive News, is a publication of Crain Communications Inc. Independent tire dealers still control three-fifths of the market.
Mass merchandisers, such as Sears and Walmart, and warehouse clubs such as Costco also sell more replacement tires than franchised dealerships, although the gap is closing. Tire makers' stores, gasoline stations, muffler shops and auto parts stores have smaller pieces of the market.