Love them or not, EVs are hugely gaining popularity – at least in the sense that we can’t help but talk about them all the time – thanks to a number of market factors, gas prices being chief among them.
In fact, according to data released by Hankook Tire in August, 26% of survey takers said the day’s gas prices are moving them to plan to purchase an electric vehicle in the future. Further, 51% say less money spent on gas is the most appealing benefit of making the switch.
And, consider this: According to Kelley Blue Book, more than 200,000 electrified vehicles were sold in the three-month span of Q3 2022 – a first – with the segment far outpacing the rest of the industry in terms of sales volumes and share growth. In fact, EVs sold in Q3 of 2022 were up 68% year over year.
The good news for tire shops here is that EVs can be particularly lucrative for the tire business operating in the right market. EVs consume tires at a much higher rate than internal combustion vehicles – in fact, you can easily find a Tesla owner who’s replaced her tires after a mere 10,000 miles. You do the math – that’s a lot of tires.
So, EVs are all the rage. Or are they? Of course, it’s good to read the tea leaves and make predictions, but today, well, the action’s not too hot.
New data from IMR Research suggests that only 27.5% of shops surveyed last year reported investing in tools or equipment to service electrified vehicles. And that’s not just tire dealers, that’s all shops under the spectrum. Compounding this tale, IMR found that on average in 2022, 3.9% of total shop business is from EVs and hybrids. Now, that’s 0.8% higher than reported in IMR’s 2021 numbers, but it’s nothing that’s blowing our hair back.
So, we’re going back and forth here, both sides of the coin, all that jazz. Here’s what you need to know:
The bottom line for tire shops wondering if they need to get into the EV business is that it absolutely depends. EVs can be a huge investment for you and your shop, requiring all-new shop equipment, carrying new SKUs and a larger variety of inventory, qualified technicians, specialized training, and probably at least one dedicated bay. If you’re sitting at the average, with only 3.9% of your customers asking for EV service, today might not be the right time to invest.
Instead, ask yourself where you want your shop to be in five years and if you feel your customer base will grow into the EV space. With the way things are looking, in 2030, there’s a good chance 50% of new cars sitting in auto dealerships are going to be electrified, but that doesn’t mean your service has to comply. It doesn’t mean 50% of cars on the road will be electrified, either. Forget the hype, and do what’s best for your business. Maybe that’s electric, maybe that’s something else.
For more business intelligence data to help boost tire dealer profitability, be sure to watch out for our next episode of Rollin’ with the Numbers.