mulberry suitcase Dealer Tire’s quiet billion
If you don’t know who Dealer Tire is, don’t feel bad.
Scott and Dean Mueller have spent the past 14 years turning a small tire distribution company into a business that generates more than a billion dollars in annual revenue.
The Mueller brothers took the rare step of making a public appearance last week to kick off a construction project that will turn all four floors of the 99 year old Victory Center building into Dealer Tire’s new headquarters. The company signed a 20 year lease with Victory Midtown LLC, the owner of the Euclid Avenue building, which is about a mile east of the company’s current office on Chester Avenue.
But before the Mueller brothers picked up their pristine shovels to ceremonially launch the project which also will include a new parking garage on the south side of the property they sat down with Crain’s Cleveland Business to talk about Dealer Tire’s past, present and future.
They’ve been turning down interviews with this publication and other media outlets for years. And there was a reason for that, according to Dean Mueller, Dealer Tire’s president.
“We thought we were on to a good idea. The (automakers) knew who we were. The dealers knew who we were. We wanted to make sure our competitors weren’t quite sure who we were until it was too late,” he said. After all, the company employs 1,100 people, including roughly 450 in Northeast Ohio.
Those numbers are on the rise. Dealer Tire has hired 200 people over the past three years. Plus, the company has promised to hire at least 100 more local employees over the next three years, given that the move is being funded in part by public money. That includes $8 million in financing, mostly loans, from the city and Cuyahoga County, undisclosed incentives from JobsOhio and more than $11 million in federal and state historic preservation tax credits.
Hence the need for the new 166,000 square foot headquarters and the parking garage, which will contain 650 spaces. The company also is in the processing of buying the vacant Triangle Stamping Building, which is on the other side of East 70th Street.
The company’s radio silence has in some ways made recruiting difficult, which is a big reason why Dealer Tire is coming out of its shell, according to CEO Scott Mueller. Even people who know Scott and Dean from Mueller Tire Brake the retail tire business their grandfather started in 1918 don’t always know what they’re up to these days, he added.
“People ask us, ‘How’s retirement?’ Or ‘Do you still have the retail stores?’ They don’t really know what Dealer Tire is,” he said.
Thank you, Mercedes
OK, so what is Dealer Tire? In short, it’s one of the largest distributors of tires and light vehicle maintenance products think brake pads and wiper blades in the United States. It serves more than 10,000 dealerships from 43 distribution centers in the United States and Canada, including one in Strongsville.
Granted, calling the company a “distributor” is a little simplistic. In some ways, Dealer Tire is like a software company, developing tools that help its customers inspect, select and sell more tires. Its marketing department often operates like a marketing agency that serves car dealers. And Scott Mueller noted that the company sometimes resembles a consulting firm that helps dealers figure out how to act more like retailers.
The idea of dealers selling tires wasn’t all that big in this country back in the 1980s, when the Mueller brothers started working for their family’s retail tire business.
That started to change toward the end of the decade, when Japanese automakers launched Lexus, Acura and Infiniti luxury brands that “had a different attitude” toward retaining customers at the dealership, Dean Mueller said.
Thus, Mueller Tire Brake saw an opportunity to expand sales to dealerships, which had been a small part of the business.
The Mercedes executives didn’t even bring business cards, so Dean figured it would be a short meeting. It wasn’t.
A month later, they had a national contract with Mercedes. Then “doors started opening,” he said.
“Toyota, BMW, all these different guys were looking at what we were doing,” he said.
If you can’t beat ’em
Mueller Tire formed the Dealer Tire brand in 1999. It became an independent business when the Muellers sold the retail business, which consisted of 19 stores in Ohio, to Tire Kingdom in 2002.
Why focus on the dealership business? For one, the Muellers realized that dealers had a few strengths, such as a built in customer base and technicians with deeper knowledge about the vehicles on which they work. If they learned the retail business, Mueller Tire could be in trouble.
“If you applied what we knew as a retailer to the service drive of a car dealership, they could sell tires. It was pretty simple,” Dean Mueller said.
And sell tires they did. Dealer Tire spent its first six years in business adding new warehouses and building new partnerships with automakers deals that allowed them to sell to individual dealerships.
Things got “a little dicey” for a brief period during the recession, he said, but the company never had to lay off employees. And through most of the downturn, it continued to hire, add warehouses and invest in technology.
It proved to be a turning point for the business. Dealers needed revenue, so Dealer Tire started coming up with new ways to help them find it, Scott Mueller said.