OTR Tire Dealers Speak
Study Shows Dealers Crave Training; Look to Add Staff
For the second consecutive year, Tire Review and the Tire Association of North America (TANA) teamed up to conduct a comprehensive study of OTR tire dealers and the prevailing OTR tire market. The extensive study was a continuation of the highly successful research project completed last year (see Tire Review, August 2000), and the results were presented at the recent TANA OTR Tire Conference.
Working hand-in-hand, TANA and Tire Review sought to create a demographic picture of the typical OTR tire dealer, and collected information on a dealer’s staff, customers, suppliers and their concerns. The return rate of slightly more than 10% on this year’s study was deemed statistically valid.
The dealers surveyed represented a spectrum of the industry. According to this year’s study, the average OTR tire dealer has been in business for 30 years, does some 41% of his business with commercial tire accounts, averages four individual locations, and grossed over $2.175 million a third of his average total revenues ®“ in OTR tire sales in 1999.
The typical OTR tire dealer, according to the study, averages eight OTR tire-dedicated staffers, including an average of six field service technicians and two tire repair specialists. Just over 50% said they planned to add to their OTR tire staffs in the next year, with 55% of those focusing on tire service technicians.
Brands & Profits
While half those surveyed said they carried one or two brands of OTR tires, on average OTR tire dealers carried 2.5 brands. Over 62% sold haulage tires, almost 64% sold scraper tires, 100% sold loader/dozer units, 90% sold grader tires, 18% sold underground mining tires, and just over 11% sold other OTR tire types.
Nearly 50% claim the loader/dozer segment is the most profitable, easily outpacing grader (nearly 15%) and haulage (10.5%) tires.
Training & Education
Most OTR tire dealers want training for their people, and rely on tire manufacturers (68%), TANA (45%), retreading/repair product suppliers (37%), and RMA (19%) as sources of information and training materials for service technicians. Methods of training dealers use include books/brochures (64%), self-guided videos (58%), on-site classes (48%), and off-site seminars (25%).
Dealers feel the greatest obstacles to obtaining useful OTR tire service training include time spent away from shop (76%), staff shortage (63%), cost of travel (32%), availability of good training materials (28%), and employee resistance (8%).
While some dealers feel their service technicians “train on the job everyday,” on average the typical OTR tire dealer’s technicians received just under five days of on-site training in the past year.
Surprisingly, some OTR tire dealers claim to not operate service trucks. Among those who do, 54% have mini-OTR trucks (up to 15,000 lbs.), 49% have medium duty trucks (up to 26,000 lbs.), and 44% have heavy duty trucks (over 26,000 lbs.). On average, 56% replace their trucks every five years, and 34% get new trucks about every 10 years.
With their trucks, OTR tire dealers average 68 service calls per week, spending an average of 1.5 hours on each call. The dealers’ range averaged 28 miles, with most traveling in excess of 30 miles one way on a service call. OTR tire service and repair did ring the cash register for dealers, though, with the typical OTR tire dealer averaging $800,000 in repair and service revenues per year.
Flat Proofing & Repair
Over 46% of the OTR tire dealers surveyed said they offer “flat proofing” to their customers, and of that group some 76% provide solid urethane material, over 28% sell ®permafoam,® and 19% offer a soft core material. On average, the dealers surveyed performed 50 flat proofing jobs per year.
When tires did go flat, just over 72% of OTR tire dealers were prepared to repair them. In over 38% of the cases, the repairs were done in the shop, and only 8% were completed in the field, with just over 61% performing repairs in and out of the shop. Of the repairs done, 44% relied on chemical curing of the repair, 29% cured repairs with heat, and over 26% used both methods.
Dealers said loader/dozer tires (77%) were most likely to be damaged, followed by scraper tires (38%), haulage tires (35%), grader tires (16%), and underground mining tires (6%).
When a tire is severely damaged, the typical OTR tire dealer follows different criteria to determine if the damaged tire should be taken out of service.
Over 63% claim “each case is different,” while 50% say ®it’s pretty obvious® when a tire should be taken out of service. Another 25% rely on unnamed guidelines, almost 14% say the fleet customer has the ®last word,® and nearly 3% call on the repair product supplier for advice.
Opportunities & Obstacles
Participating dealers were asked what opportunities they saw in the OTR tire market:
®′ “Competitors are poorly organized so there is plenty of work.”
®′ “With help, we can better educate customers as to what it really costs to repair tires, and then be able to charge them properly.”
®′ “Increase in smaller loader sales.”
®′ “Tire companies can’t manage people as well as dealers, leaving big opportunities.”
And they were asked what the biggest obstacles to their continued success were:
®′ “Low margins due to larger competitors.”
®′ “Competition for marketshare by tire company-owned facilities.”
®′ “Pricing is not stable.”
®′ “Finding qualified people, and cost of employee recruitment.”
®′ “Repair people taking shortcuts, and not charge enough to do a proper job and make a profit.”
®′ “Large dealers outside our area buying business with low prices.”