Capital-izing on Service
Dealer Name: Sparks Commercial Tire
Location: Findlay, OH
Years in Operation: 13
Number of Employees: 20
Repair Specialty: Brakes and springs
Average Number of Repair Orders per week: 105
Tire/Service Sales mix: 80 percent tires
This is the seventh installment of Tire Review’s Dealer Diary, a year-long series showcasing a typical tire dealer, his business, how he runs it, the many issues he deals with, and his thoughts on the industry in general.
This year, our Dealer Diary series, written by Managing Editor Craig Gifford, will feature two different tire dealers, alternating between one focused primarily on the retail side and another that handles mainly commercial accounts.
We’d love to hear your comments on this new series. Drop us a line using the reader feedback card in this issue, or send us an e-mail at [email protected] This installment features Terry Sparks, owner of Sparks Commercial Tire in Findlay, Ohio.
"When we bought the new truck, it took us about a year to make the decision. There’s a lot of money involved."
Equipment is critical to any tire dealer. All the product in the world doesn’t mean a thing if it can’t be installed properly, or even at all.
But the argument could be made that equipment is even more valuable to the commercial dealer, since most commercial dealers travel to their customers, instead of the other way around.
When it comes to equipment, there are literally thousands of different pieces to choose from. Trucks to wrenches, each plays an integral part in nearly every service call.
"Every piece on your truck is vitally important to your success," said Terry Sparks. "Without an air compressor or without a crane, you’re out of business. It’s not like you can go without one or the other."
But while each part is a necessity, some just cost more than others. For commercial dealers, the single biggest piece of equipment – both in size and cost – is the service truck. The truck is a mobile shop and must be able to handle any situation that arises at any time of day.
When it comes to a service truck, the biggest problem for a commercial dealer is cost. Initial sticker shock can scare a lot of dealers into rethinking their need. And for dealers that need to handle large OTR tires, like Sparks does, that cost is even higher.
"The cost depends on the size of the truck. For earthmovers, it costs between $70,000 and $100,000. That’s just for the truck. But then you have to pay for all the hand tools that don’t come with the truck. There’s probably another $8,000 to $10,000 worth of hand tools equipment on each truck."
As Sparks said, the amount that each dealer pays for the truck can vary. Some trucks need to come equipped with boom arms or liquid fill tanks or any combination of machinery. Each dealer’s needs are different, depending on which applications he’s working on. "When it comes to buying the truck, you just have to spec out the equipment that you think you’ll need at any given time," said Sparks.
There are six trucks in Sparks’ fleet, five that are in continuous use and one that’s used as a reserve in case one of the primary units breaks down. While that’s a lot of capital to have locked up in vehicles, it’s very much a necessity. What isn’t necessary is continually replacing serviceable trucks. And that’s what Sparks won’t do.
"We take old trucks and rebuild them. Trucks can last a long time if you take care of them," he said. Which means that maintenance is critical. And that’s a no-brainer, considering each fully loaded truck can cost as much as a house.
"Our maintenance costs aren’t that high," said Sparks. "We believe in the oil and lube philosophy. We do a lot of preventive maintenance.
"I look at the long-term when it comes to the expensive pieces. We’re still running boom trucks that were built in 1975. We’ve rebuilt them with newer cabs and chassis. If you maintain them, they last. The cab and chassis are usually the first to go, and those should last about 10 years."
Sparks also has an inventive way of taking care of his trucks. They’re each assigned to a specific driver.
"We give each driver a particular truck. That way, the truck is driven the same all the time," said Sparks. "And it lets the drivers dress their trucks up any way they want.
"If a driver wants chrome wheels (which Sparks will pay for), he can have them. One of our guys didn’t want the fancy wheels because he operates mostly at night and no one would see them. It just makes the drivers feel more comfortable if they can have things their way."
Whenever possible, Sparks tries to have most of the work on his trucks done by his own people, in his own shop. But every now and then, something has to be outsourced.
"We try to do most of our maintenance work ourselves, but it all depends on the amount of time we have available," said Sparks. "If we can’t do it ourselves, we have a couple garages we like to use. But by operating with a spare truck, it’s very rare that something needs to be fixed the same day."
But every so often, a truck just needs to be replaced. For that task, a dealer can spend as much energy finding the right truck as he does maintaining the truck. The first question is where to shop?
Many dealers have certain suppliers they like to deal with, just as many people will only buy a Ford or Chevy. Still others like to comparison shop. And when comparison shopping, it’s best to have all the suppliers in the same location.
"We do a lot of our shopping at the TANA and ITRA trade shows," Sparks said. "When you buy a new car, you try to go to the place that has the biggest selection. Most of our suppliers are in one place at those trade shows.
"We try to keep our fleet as consistent as possible. That means we try to keep our suppliers the same. When it comes to our trucks and the major things we need to buy, there are about three suppliers we generally like to use."
But, much like the customer who never buys on the first visit, Sparks doesn’t purchase equipment while at shows.
"We seldom buy at the show, but we do a lot of shopping," he said. "After we get back, then we make a decision."
Within the last year, Sparks purchased a new truck to replace an aged one. It was a decision that he anguished over for a while.
"When we bought the new truck, it took us about a year to make the decision. There’s a lot of money involved," Sparks said. "We sold an old truck that we had and then leased the new one with the option to buy it at the end of the five-year lease.
"At the end of the lease, we can buy the truck for book or market value, whichever is less. We thought it was an excellent way to go. I just see a lot of advantages in purchasing a truck that way."
While Sparks didn’t have an immediate need to purchase a new vehicle, he felt it best to go ahead. "We bought a new truck now, even though we didn’t need one immediately, to prevent us from having to buy two or three in a year," he said.
So, what advice does Sparks offer to dealers looking to buy service trucks and tools and equipment? That’s easy, travel.
"When it comes time for a dealer to purchase new equipment, they should go to the trade shows and see what’s available," he said. "Then, they should ask each manufacturer for a list of all their users."
Obtaining the list of users can quickly reveal the amount and kinds of clients a manufacturer is used to dealing with. From there, a dealer can ask around and see which dealers are satisfied with which manufacturers.