On this week’s episode of Rolling with the Numbers, we’re taking a closer look at how you, our tire dealer audience, are handling the rising cost of tires.
Look, we’re all feeling it. The price of goods just isn’t what they used to be in the good ol’ days… meaning, like, a couple of years ago. The fact is that tire prices have been going up, especially throughout 2021 and the first half of this year. And it’s due to all kinds of factors generally stemming from the kink in today’s global supply chain. Higher raw material costs, a lack of qualified workers, costlier freight charges – all the same stuff you’ve heard before.
But what we found in our Tire Dealer Operations Data is that all this same stuff means far from business as usual on your end – it continues to chip away at the bottom line. In fact, of the tire dealers who took our survey, only 2% told us their suppliers have kept the price of tires steady over the past 12 months. Now compare that to the 35% of dealers who told us their suppliers increased their tire prices more than 20% in the last 12 months. Add to this another 28% of dealers who told us supplier prices are up between 16 and 20%, and it’s fair to say that this is creating some real tire tension – for me it’s concentrated back here in the posterior deltoids.
Of course, it isn’t fair to blame the supplier, they’re just raising their rates to cover the new prices floated down from manufacturers. And as a tire dealer, there’s not much you can do to avoid this, other than get in line to adjust your own rates to suit the market’s new normal – and that’s exactly what you’ve told us you’re doing.
Most dealers – 93%, actually – tell us that they’ve increased their prices in some capacity over the past 12 months. Some have kept increases marginal, with 8% of dealers upping prices only as much as 5%, but 21% of dealers had to shoot their prices up 20% or more. And, 71% have increased the price of their tires at least 11% higher than they were 12 months ago.
It doesn’t stop there. The industry is also dealing with a shortage in labor and technicians going on simultaneous to the increase in the price of goods. That means tire dealers are paying their techs more, and thus 88% say they’ve increased labor costs over the past 12 months, and 32% say labor costs are up more than 10% – and although it is a great thing to compensate these hard-working men and women as they deserve, the bottom line is it doesn’t help YOUR bottom line.
Here’s the thing: According to our survey, compared to 12 months ago, 32% of tire dealers say the outlook for their business is looking WORSE. Only 19% say it’s looking better.
So how do we move that needle so more dealers are looking forward to tomorrow rather than wanting to pull the sheets over their inventory and hit the snooze for just five more minutes of peace? In today’s tire business, there’s no magic formula and there’s no indication that prices will drop anytime soon, so focus on what you can control.
So, for example, take a page from the Tire Review Top Shop Tire Dealer playbook and make it easier for customers to do business with you: Don’t just take customer inquiries by phone, upgrade to make apps or online portals available. The next step could be adding a booking platform to your website, where customers can manage and track their repair orders, car repairs and pick-up times.
One change 2021 Top Shop Burt Brothers Tire & Service told us they made for their customers was in how they deliver vehicle inspections. Not so long ago their techs were performing a multi-point vehicle inspection with pen and paper. Now, they do digital inspections that can be sent to a customer’s inbox.
And they’ve made other customer-focused changes, too. They implemented a valet service to pick up customers’ vehicles at home. They text a lot more now than they did pre-pandemic, too, sending out service reminders and text-to-pay options. If you can’t budge on pricing, these are options have been PROVEN to keep your customers happy.
For more business intelligence data to help boost tire dealer profitability, be sure to watch out for our next episode. If you subscribe to our newsletter, it’s in there, look out for it! Until next time – Keep on Rollin’!
