Are you in the tire business? If you are an OEM Dealership then the answer is NO. (As always there are a few anecdotal exceptions to that rule) I will do my best to accomplish the following: 1. Define being IN the tire business. 2. The number one reason to be IN the tire business. 3. How traditional problem solving techniques will not get us IN the tire business. Of course, no blog would be complete without a “call to action” but keep in mind I am not selling ANYTHING so there is nothing for me to gain or anything for you to risk. 
 
What being IN the tire business means? 
 
Let us examine what we know about the business which will be defined by passenger and light duty tire sales excluding OEM Factory Purchases. We will also examine OEM Dealership sales, Price Club Sales and the Secondary Market sales, which, by the way, answers for virtually every tire sold in the USA. 
 
 232 Million Replacement tires sold in the US in 2019.  30 Million Light Duty Tires were also sold in the same year. (MTD)  262 Million Sold total in 2019. (MTD)  16,708 OEM Dealerships in the US (NADA 2018)  5,500 Wholesale Clubs in the US 4,400 sell tires. (First Research Inc)  OEM Dealerships account for roughly 8% of all tire sales or 20.96 million tires.  Wholesale Clubs account for roughly 9.5% of all tires sold in the US for a total of 24.89 million. 
 
              20.96 Million Tires Sold     16,708 OEM Dealers        = 1,254 tires per year/OEM 
 
             24.89 Million Tires Sold         4,400 Price Clubs              = 5,656 tires sold per year/Club  
 
We could make the argument that we, the OEM Dealer, should be selling at least the same amount as the Wholesale Clubs per location for several reasons: OEM has more capacity, more technicians and more customers. 
 
That alone, moving the bar to catch up with the Wholesale Clubs, would bring the OEM Dealers market share from 8% up to 36% which is a worthy and attainable goal, on paper anyway. 
 
In 2017, for instance, OEM Dealers wrote 259 million repair orders. We are told, by NHSTA, that 13% of ALL vehicles on the road need at least one tire so, the math: 
 
259 Million R/Os written X 13% needing a tire = 33,670,000 Tire Sale Potential 
 
That  would be an increase from 8% Market Share to 13%! It is a step in the right direction. As you can see we have the potential because that would mean only selling one tire to 13% of the vehicles we see. 
 
So, in conclusion of my first goal of defining being in the tire business we can say that at least 13% of my repair orders should involve at least one tire sale. Very simply take ALL R/Os and do the math; you are either in or out. 
 
The Number One Reason To Be In The Tire Business? 
 
Money is the simple answer. Efficiency offers a little deeper answer but LOYALTY will be the most comprehensive opportunity to fully explain why. 
 
The only logical way to measure loyalty, if a Dealership originated the sale, is how long the customer remains loyal in service for as long as they own the vehicle. There is no other logical measure. Anything less than that is a “specious” measure designed to control a behavior of the OEM Dealers. 
 
The methodology of measuring Loyalty is now a moving target in that OEMs, parasite services like JD Powers and NADA, realize that Dealers are simply not effective at maintaining any level of loyalty with the majority of their customers after, even before in many cases, the Factory Backed Warranty expires. 
 
Once that customer seeks out the Secondary Market for service, maintenance and repairs the OEM Dealer has lost an enormous investment and must start the process of earning a new customer from the beginning. Every three years, or so, the process repeats itself. 
 
We are told the Secondary Market DOUBLES in size every five years with OUR customers! Who, what, when, where and why are all good, if not vital, questions that must be answered to ensure our survival and growth. 
 
Who and What is the Secondary Market? ANYONE that repairs, maintains and services automobiles. That was simple. Your OEM Dealership is surrounded, literally, with hundreds of licensed repair facilities within a 10 mile radius and they take in 1,000% more revenue than you do. 
 
When and Where is actually a matter of advertising and conditioning. The Secondary Market does not have the burden of an OEM partner. They typically do not sell cars and have zero competitive restrictions which allows them to savagely and relentlessly attack your client base. From the very moment your customer takes delivery of their vehicle (new or used) they only need to turn on the radio to be inundated with competitors messages. 
 
The Secondary Market learned long ago, as far back as 1929, when Firestone opened their first tire dealership, to advertise, advertise and then advertise to grow their business. OEM Dealers learned the same thing….with cars but fail miserably with advertising and promoting service. 
 
The radio is the gateway to ALL of your customers and the Secondary Market understands this all too well. 
 
The Why is easy; MONEY! It is Your MONEY unfortunately. 
 
The most expensive item most every customer will buy for their automobile is not an engine, not a transmission, not a transfer case but tires. That is the single largest purchase the customer will most likely, several times in most cases, buy before they trade their vehicle in. 
 
The need for tires, most frequently, arises shortly after the warranty expires and a full 70% of those customers are already gone from your service lane and in a lane in the Secondary Market buying tires, brakes, fluids, etc. all the items that you never, most likely, spoke to the customer about while you serviced their vehicles. 
 
In conclusion if you control the tires you control the customer and, by default, you control the loyalty. 
 
How Traditional Problem Solving Techniques Will Not Work. 
 
There are as many “old sayings” and “axioms” about selling tires as there are tires. Phrases like “if you can’t smell ’em you can’t sell ’em.” Or “You can’t sell what they can’t see.” Or even this one, “POS spells success.” Are three that come to mind. 
 
So, like many dealerships, you call your local distributor, Dealer Tire, Tire Rack or ATD and get a list of the “top sellers” in your market and you put in an order in.  
 
You set up some displays, banners and decorate the lane/lounge with all manner of tire POS and you sit back and wait and wait and wait. 
 
Your Parts Manager is on a 45 year old pay plan, never participates in specials by discounting parts and fights your Advisors EVERY SINGLE TIME THEY NEED TIRE INFORMATION!  
 
Your “budget” tire which cost $85.00 from the distributor now retails for $114.99 and your staff cannot seem to compete, on any level, for tire sales. 
 
But, you distributor has a price match guarantee that reads like a commercial property lease, requires an attorney to submit the form and if a price match is to be made you will get reimbursed 90 days AFTER you swallow the difference.  
 
The Parts Manager screams and cries to the GM who, admittedly, does not want to hear it, so he makes the difference come out of labor to placate the perpetually angry Parts Manager. 
 
The next step is spiffs. You decide that a bonus will be paid on additional tire sales and you put forth great effort only to barely move the needle, or in some cases, go backwards! 
 
All in all you spent a lot of money on inventory even though you had the “right” tires in stock. You put in great effort to let customers know you are “in the tire business” and you worked diligently to provide extra added incentives for your people to “sell” more tires only to have had it fail. 
 
The reason traditional methods will not work is three-fold: 
 
1) Tell it DON’T sell it! 2) Wrong incentives to the wrong people. 3) You do not understand the “profit center”. 
 
There is a process, a solution, if you will, that can be followed and with virtually no investment you can be fully immersed AND successful in the tire business which will get you all of the benefits that, to date, have eluded your Service Department. 
 
If you would like to explore a better option, a sure fire method of success and a way to capture the loyalty and efficiencies and profits that come from a successful tire business in your Service Department email me at cmurray@davidlewis.com for a PDF outline of instructions.  
 
No games, no fees, no harassing phone calls and no soliciting will result from this. What have you got to lose? 
 Are you in the tire business? If you are an OEM Dealership then the answer is NO. (As always there are a few anecdotal exceptions to that rule) I will do my best to accomplish the following: 1. Define being IN the tire business. 2. The number one reason to be IN the tire business. 3. How traditional problem solving techniques will not get us IN the tire business. Of course, no blog would be complete without a “call to action” but keep in mind I am not selling ANYTHING so there is nothing for me to gain or anything for you to risk. 
 
What being IN the tire business means? 
 
Let us examine what we know about the business which will be defined by passenger and light duty tire sales excluding OEM Factory Purchases. We will also examine OEM Dealership sales, Price Club Sales and the Secondary Market sales, which, by the way, answers for virtually every tire sold in the USA. 
 
 232 Million Replacement tires sold in the US in 2019.  30 Million Light Duty Tires were also sold in the same year. (MTD)  262 Million Sold total in 2019. (MTD)  16,708 OEM Dealerships in the US (NADA 2018)  5,500 Wholesale Clubs in the US 4,400 sell tires. (First Research Inc)  OEM Dealerships account for roughly 8% of all tire sales or 20.96 million tires.  Wholesale Clubs account for roughly 9.5% of all tires sold in the US for a total of 24.89 million. 
 
              20.96 Million Tires Sold               16,708 OEM Dealers        = 1,254 tires per year/OEM Dealership 
 
             24.89 Million Tires Sold               4,400 Price Clubs              = 5,656 tires sold per year/Wholesale Club  
 
We could make the argument that we, the OEM Dealer, should be selling at least the same amount as the Wholesale Clubs per location for several reasons: OEM has more capacity, more technicians and more customers. 
 
That alone, moving the bar to catch up with the Wholesale Clubs, would bring the OEM Dealers market share from 8% up to 36% which is a worthy and attainable goal, on paper anyway. 
 
In 2017, for instance, OEM Dealers wrote 259 million repair orders. We are told, by NHSTA, that 13% of ALL vehicles on the road need at least one tire so, the math: 
 
259 Million R/Os written X 13% needing a tire = 33,670,000 Tire Sale Potential 
 
That  would be an increase from 8% Market Share to 13%! It is a step in the right direction. As you can see we have the potential because that would mean only selling one tire to 13% of the vehicles we see. 
 
So, in conclusion of my first goal of defining being in the tire business we can say that at least 13% of my repair orders should involve at least one tire sale. Very simply take ALL R/Os and do the math; you are either in or out. 
 
The Number One Reason To Be In The Tire Business? 
 
Money is the simple answer. Efficiency offers a little deeper answer but LOYALTY will be the most comprehensive opportunity to fully explain why. 
 
The only logical way to measure loyalty, if a Dealership originated the sale, is how long the customer remains loyal in service for as long as they own the vehicle. There is no other logical measure. Anything less than that is a “specious” measure designed to control a behavior of the OEM Dealers. 
 
The methodology of measuring Loyalty is now a moving target in that OEMs, parasite services like JD Powers and NADA, realize that Dealers are simply not effective at maintaining any level of loyalty with the majority of their customers after, even before in many cases, the Factory Backed Warranty expires. 
 
Once that customer seeks out the Secondary Market for service, maintenance and repairs the OEM Dealer has lost an enormous investment and must start the process of earning a new customer from the beginning. Every three years, or so, the process repeats itself. 
 
We are told the Secondary Market DOUBLES in size every five years with OUR customers! Who, what, when, where and why are all good, if not vital, questions that must be answered to ensure our survival and growth. 
 
Who and What is the Secondary Market? ANYONE that repairs, maintains and services automobiles. That was simple. Your OEM Dealership is surrounded, literally, with hundreds of licensed repair facilities within a 10 mile radius and they take in 1,000% more revenue than you do. 
 
When and Where is actually a matter of advertising and conditioning. The Secondary Market does not have the burden of an OEM partner. They typically do not sell cars and have zero competitive restrictions which allows them to savagely and relentlessly attack your client base. From the very moment your customer takes delivery of their vehicle (new or used) they only need to turn on the radio to be inundated with competitors messages. 
 
The Secondary Market learned long ago, as far back as 1929, when Firestone opened their first tire dealership, to advertise, advertise and then advertise to grow their business. OEM Dealers learned the same thing….with cars but fail miserably with advertising and promoting service. 
 
The radio is the gateway to ALL of your customers and the Secondary Market understands this all too well. 
 
The Why is easy; MONEY! It is Your MONEY unfortunately. 
 
The most expensive item most every customer will buy for their automobile is not an engine, not a transmission, not a transfer case but tires. That is the single largest purchase the customer will most likely, several times in most cases, buy before they trade their vehicle in. 
 
The need for tires, most frequently, arises shortly after the warranty expires and a full 70% of those customers are already gone from your service lane and in a lane in the Secondary Market buying tires, brakes, fluids, etc. all the items that you never, most likely, spoke to the customer about while you serviced their vehicles. 
 
In conclusion if you control the tires you control the customer and, by default, you control the loyalty. 
 
How Traditional Problem Solving Techniques Will Not Work. 
 
There are as many “old sayings” and “axioms” about selling tires as there are tires. Phrases like “if you can’t smell ’em you can’t sell ’em.” Or “You can’t sell what they can’t see.” Or even this one, “POS spells success.” Are three that come to mind. 
 
So, like many dealerships, you call your local distributor, Dealer Tire, Tire Rack or ATD and get a list of the “top sellers” in your market and you put in an order in.  
 
You set up some displays, banners and decorate the lane/lounge with all manner of tire POS and you sit back and wait and wait and wait. 
 
Your Parts Manager is on a 45 year old pay plan, never participates in specials by discounting parts and fights your Advisors EVRY SINGLE TIME THEY NEED TIRE INFORMATION!  
 
Your “budget” tire which cost $85.00 from the distributor now retails for $114.99 and your staff cannot seem to compete, on any level, for tire sales. 
 
But, you distributor has a price match guarantee that reads like a commercial property lease, requires an attorney to submit the form and if a price match is to be made you will get reimbursed 90 days AFTER you swallow the difference.  
 
The Parts Manager screams and cries to the GM who, admittedly, does not want to hear it, so he makes the difference come out of labor to placate the perpetually angry Parts Manager. 
 
The next step is spiffs. You decide that a bonus will be paid on additional tire sales and you put forth great effort only to barely move the needle, or in some cases, go backwards! 
 
All in all you spent a lot of money on inventory even though you had the “right” tires in stock. You put in great effort to let customers know you are “in the tire business” and you worked diligently to provide extra added incentives for your people to “sell” more tires only to have had it fail. 
 
The reason traditional methods will not work is three-fold: 
 
1) Tell it DON’T sell it! 2) Wrong incentives to the wrong people. 3) You do not understand the “profit center”. 
 
There is a process, a solution, if you will, that can be followed and with virtually no investment you can be fully immersed AND successful in the tire business which will get you all of the benefits that, to date, have eluded your Service Department. 
 
If you would like to explore a better option, a sure fire method of success and a way to capture the loyalty and efficiencies and profits that come from a successful tire business in your Service Department email me at cmurray@davidlewis.com for a PDF outline of instructions.  
 
No games, no fees, no harassing phone calls and no soliciting will result from this. What have you got to lose?