Tire and Service Sales: Make Up of Platinum Performers

Sales: Make Up of Platinum Performers

Sales-Showroom-TiresCompared to other dealers, service sales make up the majority of a Platinum Performer’s overall sales compared to tires. Platinum Performers reported a median tire/service sales mix of 40/60; other dealers reported a 57/43 mix. Simply put, Platinum Performers do more service jobs (168 median total more service jobs), make more on service and justify the larger space devoted to service bays by increasing the amount of jobs done in a month.

Platinum Performers also display a median mark-up of 56% on service parts compared to 48% for other tire dealers. Not only are Platinum Performers marking up the parts more, they’re also more likely to mark up the service and tire tech labor by about 20% more than other dealers.

These top dealers are also more likely to generate higher dollar amount per ticket for both tires and services than other dealers. This is likely driven by the ability of Platinum Performers to package services with tire sales. In order to do this, Platinum Performers offer courtesy checks at a higher rate (median 80% vs. 70%; average 73.6% vs. 52%). This leads to higher likelihood in favor of Platinum Performers to sell service as a part of the total tire sale.

“The gross profit percentage in service is lucrative compared to tires and we need that to help sustain our bottom line. It’s also a safety issue. If we have a client in our shop and we realize there’s something that’s not right on his or her vehicle, we can advise them and keep them safe. It also gives the customer a one-stop shop.”
– Kim Sigman, owner of Community Tire Pros

Warranties are a special point of interest, with 15% of Platinum Performers’ monthly tire sales including tire road hazard warranties.

Other Sales Details:

  • Platinum Performers reported median 2013 retail tire sales of approximately $800,000 compared to approximately $614,000 for other dealers.
  • And the top dealers reported median 2013 service sales of approximately $1 million vs. approximately $570,000 for other dealers.
  • Sales of accessories and other goods/services were fairly level between the two groups. But in 2013, Platinum Performers did far less wholesale business (median of $25,837 vs. $100,000) and commercial tire sales (median $150,000 vs. $180,396).
  • All in, Platinum Performers posted median total gross revenue for 2013 of $1.716 million compared to $1.669 million for other dealers.
  • Despite the thin $47,000 difference in 2013 revenue, 35.5% of other dealers said their 2013 revenue was down vs. 2012, and 47.8% reported that revenue stayed level year-to-year. Only 18.2% of Platinum Performers reported a downturn ranging from 1% to 10% year-over-year, and 63% said 2013 sales stayed level with 2012 results.
  • When it comes to tire sales, Platinum Performers posted an average ticket of $535.36 in 2013 vs. a $409.56 average for other dealers.
  • On the service sales side, Platinum Performers posted an average ticket of $281.82 per job versus an average of $199.73 per ticket for other dealers.

“Performing a vehicle inspection goes a long way in selling additional services and accessories as part of the total service ticket. We want to give customers the ammunition to make an informed buying decision and we do that with a 21-point inspection on every vehicle. We tell the customer upfront exactly what we’re doing and what’s going on, that way it gives us the opportunity to communicate with them if there’s something on the vehicle that needs to be done.” –Tom Huls, President of Tokah Inc./Big O Tires

  • It is interesting that Platinum Performers spent on average 8.5 minutes in over-the-counter face time with each customer. Other dealers reported they averaged 11.5 minutes per customer.
  • The top dealers carried an in-house inventory of 600 tires (median) vs. 593 for other dealers, but turn their inventories 8 times per year vs. 7 times (median) for others.
  • In breaking down 2013 sales, Platinum Performers reported median sales of:
    • $214,500 per service bay
    • $184.52 per square foot of total floor space
    • $190,667 per location employee
  • Other dealers reported 2013 median sales of:
    • $278,167 per service bay
    • $237.41 per square foot of total floor space
    • $189,660 per location employee
  • Breaking down tire sales, other dealers tend to be more diversified in their product offering than Platinum Performers. As a percentage of tire sales, here’s the spread:
    • Passenger/Light Truck: 81% of tire sales (Platinum Performers) vs. 72.5% (Other)
    • Commercial Light Truck: 10.4% vs. 11.9%
    • Medium Truck: 3.6% vs. 7.4%
    • Retreads: 1.7% vs. 3.1% – OTR/Ag: 1.2% vs. 3.7%
    • Other: 2.1% vs. 1.4%

“Because we check the cars more thoroughly, we can sit down and explain to the customer that they’re going to get better mileage and life out of their car, and less break downs. We do courtesy checks and rotate tires for free with oil changes. Then we mark down brake percentages and stuff like that and use that information to send out flyers 30 or 60 days down the road to warn them that they’re going to need brakes. Because of that, they’re more likely to invest in the service.”
–Daniel Boni Sr., President of Boni Tire & Auto Service

  • When it comes to service sales, Platinum Performers outclass the rest, posting an median 545 jobs per month compared to 377 for other dealers.
  • And Platinum Performers make the most of their wheel-end service opportunities. Here are the average jobs per month:
    • Brakes: 76.2 (Platinum Performers) vs. 45.8 (Other)
    • Shocks/Struts: 17.2 vs. 13.5
    • Wheel Bearings: 24.3 vs. 12.3
    • Suspension/Chassis: 44.6 vs. 26.5
    • Alignment: 98.1 vs. 83.9
    • Oil Changes: 220.6 vs. 163.9
    • Underhood Service: 52.8 vs. 52.6
    • Transmission: 6.5 vs. 4.0
    • TPMS (New/Rebuild): 37.2 vs. 40.9
    • Other: 94.5 vs. 80.2
  • Tire sales result in alignment revenue opportunities, and Platinum Performers convert at a higher rate than other dealers. On a median basis, 50% of new tire sales by top dealers include an alignment vs. 15% for other dealers.
  • When it comes to selling road-hazard warranties, Platinum Performers do quite well. On average, 35.3% of their new tire sales include such warranties compared to 23.5% of tire sales by other dealers.
  • Platinum Performers also excel at selling accessory items. Here is the percentage that stock/sell the following:
    • Batteries: 100% (Platinum Performers) vs. 82.6% (Other)
    • Wiper Blades: 90.9% vs. 81.7%
    • Engine Chemicals: 63.6% vs. 52.3%
    • Wheels: 45.5% vs. 45.9%
    • Appearance Products: 18.2% vs. 11.0%
    • Other: 18.2% vs. 15.6%

“Not only do alignment sales come from customers, but they can come from other businesses in the area. Paul Hovis is able to leverage his alignment racks to get business from bodyshops, auto repair shops and even car dealerships in his area. “Some businesses don’t want to spend $50,000 on a new rack and alignment machine in addition to paying someone another $40,000-$50,000 a year to run it. It’s easier to bring it down here and mark the price up $10 to their customers.” –Paul Hovis, Owner of Hovis Tire & Auto

  • Looking at gross profit margins on retail sales, the dealer groups were level on pass­enger/light truck tire sales at 25% GPM. But Platinum Performers earn a greater GPM than other dealers on service labor (75% vs. 69% median), tire tech labor (75% vs. 57.5% median) and repair parts sales (55% vs. 45%).
  • Platinum Performers tend to do better with Tier 1 and Tier 3 tire brands, posting a median mark-up of 22% and 28.5%, respectively, compared to 20% and 25% by other dealers. In Tier 2, though, other dealers carry the day with a solid 25% mark-up compared to 21% for top performers.

“We have 100% alignment checks. We make it part of our service inspecting or checking at no charge, and honestly we convert most anyone that needs them. We tell people we want to care for your tires and your tire wear, and we can’t do that if we’re starting with an unknown. I can’t put rubber back on the tire once its started to get irregular wear we want to start with ‘ground zero’ protecting your investment trying to get you the best mileage and the best wear you can out of your car.”
–Kent Olson, President of Olson Tire & Auto Service

  • On service parts, Platinum Performers really show their strength, showing a median mark-up of 56% compared to 48% for other dealers.


Click here to continue: Platinum Performers Operations

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