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Penske shuts down 562 auto centers.

Article Excerpt
In one swift, decisive action, the nation's largest independent tire dealership, Penske Auto Centers Inc., has disappeared from the map.

Perhaps the most pervading question was the one least answered in the days immediately following the company's April 6 announcement that it was closing all 562 outlets nationwide: Why? Following a wave of press releases issued during a storm of litigation and accusation between it and Kmart Corp., Troy-based Penske Auto Centers (PAC) finally offered a reason for the closure.

Penske President Jim Wheat told Tire Business the decision stemmed from evaluation over several months. He pointed toward the events of Sept. 11 and the resulting economic hit that many in the travel and automotive industry took as playing a role.

``We took a real significant impact,'' he said. ``Beyond that, the fourth quarter was soft.''

When Kmart closed 283 stores March 8, Penske, in turn, was forced to close 63 outlets. Mr. Wheat said that bite also was difficult to overcome.

``That's 10 percent of our store base,'' he said. ``Given all the economic situations.... We evaluated it over and over for six months. We couldn't see on a go-forward basis the opportunity to be profitable in the short term ... or the long term.''

In an earlier press release, Penske said the decision stemmed from a March 27 meeting involving Penske Auto Centers Chairman Richard Peters and Director Roger S. Penske, and Kmart's COO, Julian Day, and its chief restructuring officer, Ronald Hutchinson.

Kmart owns a 36-percent stake...