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Editor's Notebook

Eyes Wide Open: Does Fog of Easy Money Obscure Reality of Car Dealer Danger?

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“Some of these guys are really worried,” Bud said, gesturing toward a group of dealers nearby. “But I’m worried that a lot of them just don’t see it.”

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Bud Hogan, owner of Miller Motors, a tire dealership in Mankato, Minn., is a member of U.S. Tire & Exhaust’s American Car Care Center’s dealer council. He knows just about every one of the dealers – large and small – in that group. And, he’s been around long enough to know a problem when he sees it.

The “it” he was referring to was tire sales by car dealers. Despite pronouncements from other corners, it is an issue he fully feels threatens the livelihoods of not only the 80-odd dealers in the room, but also every dealer from coast to coast.

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The subject of car dealer tire sales was a hot topic of the group’s annual meeting in Wisconsin Dells last month. It came up in cocktail and dinner conversation. It was hashed over with the morning hash. It was a key point in PowerPoint presentations.

Some in his group, Bud said, see the threat, but he’s concerned that the short-term, small dollar gains of these “easy” tire sales are a thick fog obscuring the future.

“These guys (car dealers) have more money and more pull than we do,” Bud said. “If they want to do something, they will. We can’t stop them, but we have to stop helping them.”

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Car dealers, he recognizes, will sell tires if they want to, and thanks to all the OE tire players, they will always have a ready source. But, why should independent tire dealers be the pipeline? Isn’t that akin to selling to Wal-Mart or the price clubs?

I have heard from many tire dealers since my December 2005 column appeared. Most see the same thing Bud does. There is an underlying feeling of helplessness, of being between a rock and a really hard place.

Many have already cut their dealer sales. They are turning away “tire problems” sent their way by local car dealers. It won’t completely stop the flow, they recognize, but at least they’re turning off one faucet.

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Others see the peril, but they try to justify their actions – perhaps to themselves.

“If I don’t do it, someone else will.”

“As long as they’re going to sell tires, I might as well make something.”

“They will never beat us on service.”

Truthfully, one cannot argue with the logic. The service and expertise offered by any independent tire dealer will trump the cold-hearted, pre-programmed approach that has made car dealer service centers such pleasures for consumers.

But dealers cannot live and die on “expertise” and “service.”

Look around. How many neighborhood tailor shops do you see? Or pharmacies or butchers or cobblers. Expertise and service were supposed to save them, too.

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Dealers complain bitterly about the low tire prices offered by mass merchants and price clubs. Price competition drives profit off the dealer’s ledger sheet, and they blame the tire companies for feeding that earnings-eating beast.

Sure, price is an issue with consumers, more so today as household budgets tighten. But when you really look at it, it’s really about price and convenience. If a consumer – who knows virtually nothing about tires – can get virtually the same product (in their minds, at least) for a lower price and save a separate trip to another store, why wouldn’t they?

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Milk, check. Blue jeans, check. Case of toilet paper, check. Radials, check.

Car dealers are blatantly advertising “low prices” on their tires. And they, too, have a convenience card to play. Plenty of drivers come in daily for warranty work or recommended service or for a recall. Some of them need tires, too. So why wouldn’t they consider a car dealer? And, guess where they are going when that pesky TPMS warning lamp won’t go out?

But, tire dealers willingly feed that profit-chomping beast by “taking advantage” of the programs propagated by the tiremakers. Just who is being taken advantage of here? Not the car dealer with the multi-million dollar showroom.

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The fox is already well in the henhouse. Heck, the National Association of Automobile Dealers participated in National Tire Safety Week and is back again this year. Pretty sure NADA won’t be using NTSW to push roof racks or heated leather seats.

Do you want to chase the fox away? Can you?

The greatest strength of any independent tire dealer is independence. Theoretically, that means independent dealers are their own people. You can do what you want, how you want, when you want.

Independents don’t answer to tire companies or automakers or some corporate offices in Arkansas. They answer only to themselves and their customers.

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That means you get to make the decisions…and you get to live (or die) with the consequences.

Just make sure that when you do, as Bud said, your eyes are wide open.

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