Case 5: Right Money For Right Repairs
Can you make money selling complete tire repair service to your retail customers? Most of you would likely answer "No," grumbling about having to fix tires because that’s what the customer expects.
According to Jerry Davis of Group 31 Inc., and Bill Johnson and Buck Blair at Tech International, there’s no reason why today’s retail dealer can’t turn proper repairs into profits.
All it takes is a little salesmanship, the right products and procedures, and a willingness to turn away those looking for a $5 special.
"It’s great to treat the customer nice, but with the cost of everything going through the roof, you really have to charge properly for it," said Davis, director of materials sales for Group 31. "And to do it right is going to take time."
"Some dealers view it as a give-away thing. It’s a nuisance, and they don’t see the profit potential," said Davis. "The guys who see tire repair as a profit center really expound on it and do extremely well with it."
"If you look at what dealers are charging per hour on undercar/underhood repairs, they’re making a lot more money doing that vs. tire repair," said Johnson, Tech’s director of training. "They can’t charge the same hourly rate as they do for brake work," even though they’re tying up a service bay to remove the damaged tire.
"If the customer is used to paying $5 or $6 for a string repair or a patch only, and you want to charge $20 to do a complete off-the-wheel repair, the customer is going to hesitate quite a bit, even if they paid $100 or more for the tire."
"I don’t think most dealers sell it," according to Blair, Tech’s national sales manager. "The tire technician doesn’t tell the customer how they’re going to fix the tire, and the customer doesn’t ask questions. To them, it’s just a flat."
Right Training Important
Proper tire repair training is another major obstacle to charging the right price, and making a good profit. Tire Review’s 2000 Tire Dealer Profile Study showed that 75% of dealers claim to be performing proper off-the-wheel repairs, a figure the experts dispute.
Blair feels dealers are confused as to what a complete off-the-wheel repair entails. "That 75% might be wishful thinking. A lot of guys do take the tire off the wheel, but they only use a patch. And they think they’re doing a good job.
"If you’re talking about dealers that are filling the injury and putting a patch over the stem from the inside – a complete, proper warranted repair – that number is probably 30-35%."
"I’m going to guess that 80% of them aren’t doing repairs correctly," said Davis. "And that’s based on our field training efforts."
Both companies, as well as the other major repair product suppliers, offer extensive on-site and off-site training programs, covering passenger tires on up through giant OTR units. While dealers do face high turnover among tire techs in their shops, the right attitude toward repair and dedication to training can quickly overcome those problems.
"If dealers properly train their guys so it’s done right the first time, they won’t have any comebacks – or worse yet, an unhappy customer that never comes back," said Davis.
Have to Charge Enough
Do dealers charge enough for tire repairs? "Most of those doing proper repairs are probably charging at least enough to recoup their cost," said Johnson.
"But whether they’re charging enough, I don’t know. I think most are probably charging in the $10-$12 range when they should be in the $15-$20 range."
Said Davis, "It’s amazing how many of them charge $7.50 for a repair, when it costs them $7.50 to do it."
"There’s a lot of information available from repair manufacturers and tire makers to help, like POP displays and tire cuts that show how the right repair is going to save a tire," said Blair.
"It wouldn’t take but 2-3 minutes, and I believe you could use those things to sell a consumer on all the good things the right repair is going to do for him and the tire. Then the dealer can get more for that repair."
Plus, performing a complete tire repair offers added profit opportunities. "Doing an off-the-wheel repair definitely gives you a chance to look at other things – inspect the tires for irregular wear, look at the brakes, look at other mechanical things under the car, do a safety inspection. Then they can give the customer some information on future needed services and set an appointment for them."
Has all the attention on tire safety turned some dealers away from tire repairs? "What I’m seeing is a lot of them are putting tire repair customers off, telling them to leave the tire and come back later or saying it will take three or four hours. Maybe they’re hoping the customer will go away. And that’s stupid," said Davis.
"What does it cost to get a customer into your store in the first place, whether it’s for a flat repair or to for something else? When you have the opportunity to service them and win them over and bring them back again, you can’t pass that up. Especially with women customers, who tend to be impressed by good service," he said.
The opportunities are indeed there to build that segment of your business – with the right price, the right profits and the right way to add new customers. "If dealers get a professional attitude about tire repair, treat it like a profit center and charge like it’s a real service, then they can make some money at it," said Davis.
"Flat tires are a fact of life. You can anticipate that when it rains or the snow starts to melt that you’re going to have flats. They’re going to come out of the wordwork, so you might as well grin and enjoy it."
Some Simple Math Will Make Tire Repair Sales
A Lot Easier – and More Profitable
Need some help explaining the cost/value benefits of a proper, complete plug/patch repair to your customers? A little simple math and some basic information from the customer will easily show how much they can save with the right repair – and allow you to charge a better price for your efforts.
First, find out what the customer paid per tire for their tires. For the purposes of this example, we’ll say it was $80 per radial. Then find out what the warranted mileage for the tire was, say 80,000 miles. And, find out how many miles have been run on the tires since they were first installed. In this example, we’ll say 20,000 miles.
Using the example figures, this tire was scheduled to deliver 1,000 miles for each dollar of cost, or a cost per mile of $0.001 (dividing initial cost by warranted mileage). At the time of its flat, $20 of the tire’s warranted life had been spent, meaning the remaining value was 60,000 miles or $60.
If the tire was scrapped and replaced, the cost/mile for the original tire would zoom to $0.004/mile – four times the original factor. Adding the cost of a new 80,000-mile tire – say another $80 – means the customer would have paid $160 or $0.0016/mile to get only 100,000 of the 160,000 warranted miles they should have.
Put another way, the customer would have lost $140 dollars – the remaining value of the original tire plus the cost of a new tire – to have driven just 20,000 miles.
For a $20 complete plug/patch tire repair, the customer would have saved the original tire and retained its mileage warranty – extending their cost/mile only to $0.00125. That $20 repair, in fact, saves the customer at least $60, and as much as $140.