Where is the money coming from, tires or service? For many tire dealers, this is clear-cut, but for some, it’s difficult to know what tires and service successes to lean into and which are short-lived blips on the radar. Some dealers focus all their efforts on sales, devoting service time only to flat repairs, mounting and balancing. Others make a great living by investing in the technicians and equipment that make them stand out in specialty services, like electric vehicle maintenance.
In this month’s episode of Rolling with the Numbers, we take a look at where tire dealers have found the greatest success – tires or service.
Here’s a transcription of the video:
Christian: Yeah, I’m sorry David, I guess I just don’t get it.
Christian: There’s one album I know… what the heck was it…
David: Oh, Van Halen I?
David: Women and Children First?
Christian: No… OH! OU812, that’s it. Man, now THAT is what I think of when I think of Van Halen.
David: …WHAT? Somebody Get Me a Doctor – Van Halen makes you think of Sammy Hagar? That’s like someone who thinks of their local tire dealer as just a place they go to get their oil changed.
Christian: I mean, that’s how some people see their local tire dealer, but I think that’s actually OK. As long as profits are rolling in, who cares if it’s through tire sales or service?
David: Sorry man, but You’re No Good. Selling tires is what being a tire dealer is about. And David Lee Roth is Van Halen’s frontman, not Sammy Hagar. Look, let’s Jump on over to the data – you know, the data that gives tire dealers information to keep their tire businesses rollin’ with research conducted with our independent tire dealer audience.
Christian: Of course. Wait, we have data on ’80s rock?
David: No – but our latest round of data asks tire dealers to compare their sales numbers between 2020 and 2021, and it’s looking like most dealers aren’t asking themselves Where Have All the Good Times Gone – overall, 78% of tire dealers saw an increase in tire sales and a 75% saw an increase in service sales. So as you can see, the focus is on tire sales.
Christian: Come on, David, Finish What You Started.
David: What do you mean?
Christian: We also have data on tire dealers who had a down year, and it shows 9% experienced a decrease in service sales, whereas 17% experienced a decrease in tire sales. And, if those numbers seem like they don’t add up, some dealers said they experienced no sales changes year over year, and some told us they only sell tires – no service.
David: Maybe those shops are just situated near Mean Streets, with potholes and stuff.
Christian: Or, maybe these dealers are still proud to be tire dealers but have happened to find more or similar success over the years when they focus on service. You don’t think it’s OK to like both? It’s the Best of Both Worlds!
David: …You have a point: Oil changes, alignments, flat repair, balancing, mounting – where would the industry be without leaning into these services? Being a tire dealer is about more than just selling tires – the gig has evolved. It had to, or customers would have told their local tire dealer “Happy Trails” long ago. And… I guess I can admit the Sammy Hagar era had a few solid tunes, too. 5150 rocks.
Christian: And correct me if I’m wrong, but other than being the “David Lee Roth” version of a tire dealer, it seems like it might be beneficial to focus on service, since you won’t need to store many tires, right?
David: Christian, that’s a solid thought, but this is 2022, baby! In today’s market, a lot of tire dealers we surveyed told us they have no problems keeping absolutely zero inventory, or very, very little on hand at any one time. The nice thing about tires is Everybody Wants Some, so it makes sense for most dealers to keep that part of the business strong.
Christian: You Really Got Me, David, how is that possible?
David: A ton of distributors have found a successful business model out of making one or two deliveries to shops a day. One dealer even told us he gets three independent deliveries every single day. That means that tire dealers who may have shied away from tires in the past because they didn’t have the room, might benefit from calling their distributor and rethinking what they might be capable of.
Christian: Huh, sounds like that’s what Dreams are made of. How do tire dealers feel about that kind of service?
David: Our data shows 84% are satisfied. You might say they’re Dancing in the Street.
Christian: Really? Keeping track of that inventory on a daily or even an hourly basis sounds like a recipe for things coming Unchained really quickly. What a headache!
David: You’d think so, but there’s some pretty killer shop management software out there that helps dealers keep track of their inventory by the second and, in fact, 85% of those who took our survey told us they’re satisfied with their inventory tracking software. It’s a beautiful, synchronized dance between dealer and distributor, climaxing with the tire sale just as Diamond Dave just absolutely nails that mid-air split.
Christian: Or when Sammy Hagar’s classic tenor timbre hits one of those beautiful high B-flats.
David: Maybe there is room for both Diamond Dave and The Red Rocker in one band – just like there’s room for both tires and service under one tire dealer’s roof. Thanks for opening my eyes, Christian.
Christian: It’s my pleasure, that’s what rock & roll’s all about.
Christian: For more business intelligence data to help boost tire dealer profitability, be sure to watch out for our next episode of Rolling with the Numbers. If you subscribe to our newsletter, it’s in there, look out for it! Until next time –
David & Christian: Keep on Rollin’!