In the early 1980s, Rodrigo Valle Hernandez had a dream to establish a tire dealership that would one day grow into a multi-chain store. With a deep passion to achieve that dream, his Tersa Llantas now has 30 tire dealerships and 65 Associate Alliance Tersa dealers throughout the northern part of Mexico.
The store’s commitment to its customers, its employees and its community are just some of the reasons why Tersa Llantas has been chosen as a 2013 Tire Review Top Shop Award Finalist and is the first Mexican dealership to be recognized.
Valle, Tersa Llantas founder and executive president, said he’s always had gasoline in his veins, but rubber came later. When he was younger he started working in the automotive business like his father. His father-in-law owned a tire dealership. One day Valle thought he should combine the two.
“I started thinking if I have some gasoline in my veins, I should also have some rubber,” Valle says. “So I experimented with the idea of opening a tire store.”
In 1982, Tersa Llantas was open. But Tersa Llantas, and Valle’s dream to create a multi-chain store, were almost over before they truly began.
Shortly after the Mexican-based tire dealer opened its doors, the country experienced a devastating devaluation of its currency, the peso. Since the store had to import both its tires and equipment from the U.S., the devaluation – 100% to the dollar – nearly forced Tersa Llantas out of business before it even took root.
Valle says he gathered together the handful of employees he worked with at the time to come up with a commercial and financial strategy to survive. They either had to understand the difficulty ahead or close the store, he says.
“We learned the difficult way how to make a better business. It took the best out of us, we had to be more strategic in everything that we did because we could not lose any more then we were already losing,” Valle says.
The first few years were challenging, but Tersa Llantas survived. The company renegotiated its contract with the then Uniroyal Tire Co. to make it more feasible to survive and instead of paying its equipment leases off in five years the tire dealer paid them off in three, Valle says.
“The devaluation taught us at the very beginning that in order for us to survive we would have to be very clear and have vision of where we wanted to go and how we wanted to get there,” he says.
One of the biggest challenges Tersa Llantas still faces today is the exchange rate risk. In addition to that, the company has to deal with tariffs on imported products. The company imports roughly 80% of its tire and service products and has no control over tariffs or exchange rates, so the business has to plan carefully.
“When we try to plan several years out or do our business plans we have to do a lot of research and analysis so we can determine what kind of risk we’re going to have to take,” Valle says.
A Growing Business
In the beginning, Tersa Llantas started out as a sub-distributor for Uniroyal. Valle says as a sub-distributor, it wasn’t easy to expand the business and open more stores.
However, when Michelin North America took over the Uniroyal brand and came to Mexico it was a “new ballgame.” Tersa became a direct dealer for Michelin and began opening more stores and expanding into additional states, Valle said.
At first Tersa was a Michelin and Uniroyal dealer but eventually it started carrying BFGoodrich, as well.
“With all the Michelin brands, that put us in another league with other major players that we were competing with at that time,” he says.
Tersa continues to be a Michelin dealer, selling its products to its retail customers and to its own Alliance dealers. In addition to Michelin North America lines, the tire dealer also sells Cooper and Hankook tires.
Tersa sells to everyday consumers, as well as fleet customers. Several of Tersa’s stores are able to service commercial trucks and the company owns a retreading facility, a Michelin Retread Technology plant in Tijuana that provides service for the different locations.
In addition to selling tires, Tersa offers alignment and tire/wheel balancing, tire rotation as well as brake and suspension service.
Meeting Customer Needs
For Tersa Llantas, customers are the number one priority, and its business strategies are designed around what’s best for the customer. Employees are key to Tersa’s customer service, as well as its value added services, its high quality stores, and the brands offered, Valle says.
Since each state and territory has different needs, Tersa tries to offer the highest quality products and services to meet those needs.
“Being that the roads in Mexico are not as good or as quality as those you have in the U.S., not any tire, I would say cheap or lower tire, will handle the type of roads we have. We try to have the product that our Mexican customers need in the areas we do business with them,” Valle says.
In northern Mexico, where Tersa Llantas is based (specifically in Baja, California, Mexico) consumers are very influenced by the U.S. way of doing business, Valle says, especially in border cities and brands are important.
For Tersa Llantas some of the main competition in those border cities would be tire dealerships in cities on the U.S. side, in both California and Arizona. In addition, Tersa has to compete with big box stores such as Costco, Sam’s Club and Walmart. The company has to be more competitive as other dealers to survive, Valle says.
“One of our goals is retaining our local customers, to keep them from crossing the border to buy tires from the U.S. side,” he says.
One way Tersa Llantas competes with these dealers is through its service prices. Even though Tersa Llantas has exactly the same equipment as the U.S. stores and its technicians are highly trained, the cost of services can be up to 50% less because the cost of wages, Valle says. So the company makes sure to advertise such advantages.
In addition, Tersa has several value-added services it offers. If someone’s tire gets punctured, Tersa Llantas will fix the tire free of charge, as long as it was a brand Tersa carries – even it the tire dealer didn’t sell the tire, Valle says.
Additionally, when someone purchases tires at Tersa Llantas, they get free rotations for life and can purchase an insurance policy that doubles the manufacturer’s tire warranty. Tersa also has a security check list of 10 vehicle safety points that it checks any time someone brings their car in no matter the service, Valle says.
The store also offers comforts and amenities while customers wait. There are TVs to watch, current newspapers and magazines, Wi-Fi, free coffee and cookies as well as soda machines, Valle notes.
Some stores also have a window that overlooks the service bays so customers can watch their vehicle being worked on while they wait. Valle, who travels frequently, tries to take the best from tire dealerships that he visits around the globe and put them into his stores.
“Our stores are high quality, number one stores, that could fit any place in the world,” he says.
As a service to not only its customers, but to all those in the community, the dealership publishes “Tersa Tips.” The tips are designed to educate the public about the importance of maintaining their vehicle.
“We think that even worldwide customers don’t really get the importance tires play in a car, so we’re trying to educate and inform our customers,” Valle says. “We give them a little more knowledge of the importance of their tires, the importance of their shock absorbers, the importance of their brakes.”
He says that providing customers with this information lets them know Tersa is concerned with their safety and has the professional know-how to take care of their vehicles. People see the tips and think of the store as their professional advisors, and this makes Tersa an easy choice for service and tire needs.
Tips appear on Facebook as well as in print in the Sunday edition of the newspaper. If someone has a question about a particular tip, they can always reach the dealership through email or a phone call, Valle says.
One way the dealership monitors the quality of service it offers is through customer feedback. Each customer who comes in for tires or other services fills out a satisfaction survey. The company also utilizes mystery shoppers to better understand the customer’s experience and be aware of areas for improvement.
Tersa Llantas wants to be on the mind of consumers when they’re thinking about tires. To become a more recognized brand, Tersa is constantly marketing itself in a variety of ways, including traditional advertisements in the newspaper, billboards, Facebook and Twitter, Tersa Tips, and sponsorships of various local market events.
Another tool the company uses to communicate with its customers is its NotiTersa bulletin. The internal and external communication comes out three times a year and shares accomplishments, identifies outstanding employees and other important news.
Tersa also sponsors various events and individuals, and is involved in sports sponsorships, sponsoring both football and soccer teams, as well as supporting horse jumping events, among others. Additionally, Tersa is involved with auto racing, specifically off-road racing with sponsorships of the young Mexican driver Jorge Cevallos and participating in local races – the internationally known Baja 500 and Baja 1000.
Tersa Llantas has also developed its own mascot – Tersa Boy – a character that appears in the company’s advertising and events.
Company of Dreamers
The pride of Tersa Llantas is its employees, Valle says. The company believes the future of the organization and the potential of its employees are intertwined.
Each year the human resources department schedules different annual training for its employees. Tersa Llantas offers professional training focusing on preventative and maintenance services as well as on new products. The tire dealer also hosts motivational courses and retail training, among others.
Tersa believes if it takes care of its employees, they will in turn support Tersa and its customers. The company wants it employees to make a career with them and consider them to be part of the family.
Since the company was founded on one dream and the owner is a passionate person, Tersa Llantas has a company slogan – “One dream, one team with passion.”
Valle believes dreams can be a very powerful thing. Last year, Tersa Llantas started a dream manager program for its employees based on the book “The Dream Manager” by author Matthew Kelly. Valle saw Kelly at a Michelin conference in southern California and was struck by his dream manager program and decided to offer it to his employees.
Currently more than 90% of Tersa’s 450 fulltime employees have shown interest in the voluntary dream manager program.
The company’s dream manager helps employees focus on their dreams and prioritize what they need to do to reach them. The dreamer has to develop their own dreams but the company can help facilitate success by providing counseling and providing support, Valle says.
Since its inception the company has already helped several employees with their dreams, such as getting a high school diploma, learning a new language, and purchasing a house.
“Being that the employees are developing their dreams they are much happier. When we have happy people working, they are more effective, they are more efficient and they are contagious of the positive things happening in their life,” Valle says.
Tersa’s Dream Manager Program has been such a success and response has been so overwhelming, the tire dealer is considering adding another dream manager to its staff, Valle says. For those efforts, Tersa has recieved several great place to work awards, including being recognized by Mexico as one of the country’s 2012 Great Place to Work For.
Valle says it’s important for him, Tersa managers and the company to be socially responsible.
One way Tersa gives back is through the Valle Bibb Foundation. Founded in 2012, the nonprofit organization was established to help the community resolve social, educational and health needs. Since its founding, 95% of Tersa employees have participated in the organization by providing funding or volunteering.
Valle has also provided funding to his alma maters in the U.S. and Mexico. The company has donated more than $100,000 to the Army-Navy Academy in California. Additionally the company has donated $1 million for the construction of an auditorium at Cetys Universidad in Mexico, and $125,000 for a classroom.
“The reason is the future of Mexico. We have very great needs for higher and better education. And the future of the next generation is strictly based on if we can offer better education through better colleges, through better instructors, through better school equipment. That’s why I’m fully committed to education,” he says.
In addition, Tersa has been very involved in supporting the Foundation Castro Limon, which provides support to children with cancer. The company has donated vehicles for transportation, helped with construction of the hospital and “adopted” a child for treatments.
Currently Tersa Llantas operates in five states – Baja California, Baja California Sur, Sonora, Sinaloa, and Nayarit – but plans to expand across the country. In the next five years, the company hopes to open stores in at least two additional states and possibly cross the border into California, Valle says.
As Tersa moves forward and continues to grow outward, the tire dealer will continue to offer the best services and products for its customers. “Our main focus is on what our customer needs and not what our competitors are doing,” Valle says.
And that focus is a key reason Tersa Llantas was selected as a Top Shop Finalist.