DealersEdge Professional Forums

We've all been urged to become full fledged tire salesmen. Probably a good idea given the statistics regarding tire shops getting 70% of their business from non-tire maintenance and repair jobs.

My problem is deciding how many tires to stock. To be able to really be in the tire business and service customers most of the time without having to send off for tires, it seems we'd have to really make a huge investment in inventory -- ($10,000 - $20,000). Does the dealership bite the bullet and make that investment?

Coming from the world of purchasing in a manufacturing environment, the trend is buying on consignment. Load your shop with inventory and pay the supplier as you sell or use their product. I can't seem to find a tire distributor who likes that idea.

I'd like some insight as to what others are doing in the area of tires.

Every dealer I've worked with so far has reached their own comfort level for the initial inventory. Some have taken the $20,000+ jump and others are just dipping their toe in and ramping up slowly.

(Actually the #1 problem I hear from dealers is not the $$ for the inventory. The biggest problem is the storage space, followed quickly by shrinkage. Inventory will always be used and $20k isnt a lot to enter a new market segment. Id rather spend $20k on tires than I would a new alignment rack.)

I suggest working with the local tire distributors to come up with the product matrix from your store's vehicle mix. Every distributor worth their salt knows the top selling sizes for your vehicles. Start at the top and then draw a line in the sand where you feel comfortable. Say it is $5,000 investment of inventory that would probably by you a set of each of the top 10-12 sizes.

Also dont forget used vehicles. For most dealerships I know of used vehicles alone accounts for the majority of tire sales for the shop.

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** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

Bam


Two years ago this dealership was averaging 3,000 to 4,000 in tire sales a month. Over the summer we made several changes to our approach to the tire business.

1)We invited all the main tire suppliers in the City to come in and meet with us.
The intention was to cultivate a new relationship, rather than be competitors (as we had in past been working as) we would be seeking business partners. Of 15 tire stores we made firm business friends with 3 of them. In doing so I provided them with the list of sizes and tires unique to the Saturn brand. These three business promised to have a cross section of these tires on hand in all the sizes selling to us at a price comparable to our GM program. Don get me wrong, we use the GM program, but at times have spikes that cause a stock outage or availability problems at MUG. The parts team now has three key business partners that we can lean on to fill these areas. While we do deal with a few others these 3 suppliers have allowed us to fill virtually any request for tires in short order. As well, this is a two way relationship as they have bought tires from our store. We have been able to swap tires that we found where not selling or sell off an odd one of end of run tires such as the X_ONE Michelins as they had 3 we had one; in turn we both where winners in that we relieved inventory of dead stock. and they had a complete set of tires.

This is the first of several changes that we have made in house, while not the only reason for our success it is one of the aspects that has contributed to our improvements.

Is it working ? , Last 7 weeks we sold $ 40,000 in tires.

Hope this is of assistance to you.


John

[This message has been edited by johnny o (edited 12-22-2004).]

I have strong opinions on the subject and it is called CUSTOMER RETENTION. Ask yourself why should my customers be loyal to me? It's not always about price! It's often about convenience and value.

Given that NADA says 13% of all vehicles coming into franchised dealership need tires and out of that 70% of those customers would purchase when asked, I know there is a viable opportunity for $ you are not getting today. It is obviously in your best interest to have your customer visit the dealership for all of theier car needs. Wether we are talking about tires, windsheild dings, or body work (regardless if you have abodyshop or not)just to name a few examples. You want your customers to have your dealership to be the first thought when they think about their automobile otherwise they will look to thrid parties. It is cheaper to invest in keeping your customers than getting new ones. That is a fact.

With that said back to the tires discussion. You will need to decide to a I want to carry tires or just promote them and do them as sublets? Either way you will help prevent them from going to the tire vendor down the street. I agree with Rob's commnets above. Try creating a report of service customers with over 40K with the year make and model detail ranking them by models with the highest number of visits. Take the top ten models off of the list and go to your tire vendors website and research the tire sizes for your top ten models. Once you have that you can identify which tire sizes are the most polular for you to concider carrying, as well as a number to calculate an ROI based on your store volume. Do an ROI, set a realistic goal and see if it pencils out to concider selling tires in your store.

I have not even mentioned about the profit opportunity on high end bling-bling custom wheels to be offered on the showroom floor. That is a whole other discussion.

[This message has been edited by ScottM (edited 12-22-2004).]

[This message has been edited by ScottM (edited 12-22-2004).]

We are a fairly small dealer and signed up on the GM "On A Roll Tire Program" about a year and a half ago. Previous to that we had sold zero tires. We started by looking at the most popular cars and trucks we sold and serviced and corresponding tire sizes. We ordered a set of 4 of each and ended up with about a $5,000 inventory. We are now selling about $5,000 per month and our inventory has grown to about $9,500. We still find tires sizes we need that we don't have in stock but in most cases our customers don't have a problem waiting the 2 or 3 days it takes to order in the tires.

We too have built a relationship with two tire dealers in town that we can pull inventory from if we need it. There is also a Cooper tire distributor in our town that has a good stock of most sizes of tires. We use them if we have a customer that can't wait and are willing to purchase that brand. Over all getting into the tire business has been a good move for us. Not only do we sell tires but it also helps us sell suspension and steering parts as well as alignments. With warranty sales declining and the customer pay business getting more and more competitive, tire sales are a great way to fill in the holes and boost the bottom line.