Tires Sales are a Vein of Gold!

Brad Bossen
Tire sales have been an excellent source of income for dealerships for years! Each year, right after the New Year, selling tires becomes a NEW profit center. Management is excited, large inventories of tires are warehoused in Parts, the local tire rep brings out plenty of pennant flags, racing posters and tire stands; and by early summer the whole program has melted away. I was attending a dealership management meeting recently that included the DSM and the DPSM from the franchise. As is very common this time of year (preparing for Spring), the DPSM makes a strong pitch for tire sales. "At least one in every customer on the Drive needs tires, gross profit per tire sale averages $15, labor rates are high and the percentages increase across the board. Not to mention all the additional income will flood the shop when we take off the tires! The DPSM had computed that gross profits in this dealership alone could be increased over $100,000. As the meeting dispersed I noticed the franchise reps huddle with the owner and GM to discuss this new-found "vein of gold."The Parts and Service managers slipped out quickly, and weren't smiling! WHY? To understand why, one must 'follow the money'! The ASM's are the tire sales people! And ASMs will sell whatever makes them money, period. Scenario: Car on the lift for a lube service and the Tech notices a leaking oil pan gasket and two tires in need of replacement. The ASM contacts the customer to up-sell the work. Customer agrees to both and asks to be called with the price. ASM spends the next thirty minutes trying to match the tires and finds a set on the other side of town. Tires will be delivered after 3pm. ASM calls the customer with the new price for the oil pan gasket and the two tires; AND informs them that the tires will be in by 3pm (never happens) and they can pick their car up after 5pm. " Oh….. you know….that's OK,…don't worry about those jobs, I need my car this morning, just do the lube service, I'll get It done the next time I'm in. Thanks!" The ASM just lost BOTH jobs. Next time the ASM will only up-sell the mechanical job and pass on the tires. Not a good risk. This scenario happens over and over every day. Are tire sales lost? Sure. Are all the pretty flags, stacks of tires and racing posters going to sell you more tires? Usually no. Are you going to have a bunch of left over tires (cash) in Parts? Usually yes. Start Here for Some Help: Whoever is the franchise contractor that supplies your dealership with tires must be a DAILY participant in your tire business. Constantly checking inventory. They have current sales records of what tire brands and sizes are the most common for your franchise in your area. Let them establish the inventory. Stock heavy on popular sizes/brands for your most popular car/truck models. Insure that ALL tires are returnable at no cost. Tires ordered from the local warehouse must be available within two hours (you have to become a real SOB here). Spiff the Parts counter reps (a dollar or so per tire will put the tire call at the top of the list!). ASM's make their money on the sale if everyone does their part; ASM spiffs for tires aren't cost effective. Now cross your fingers! Tires are a very hard sell in dealerships because EVERYBODY knows that they can buy tires at Costco, Sears, Sam's Club, and all the discount tire stores for a lot less than at the dealership; and it can be done in less than an hour! So if the customer does agree to the tire up-sell, they will use any opportunity possible to allow them to back out and shop elsewhere for a better price (guess who's going to get that oil pan gasket repair too?). If you have a large inventory, the popular brands and sizes, spiff the Parts counter people, and have a few lot tech/Tech helpers to speed the process…your chances of successfully mining this vein of gold have a much better. Good Luck.

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