Most tire shops do a lot of service work for their customers, but what is driving the most profits? This week we’re talking about the service options your shop offers. For tire shops, if tire sales are the peanut butter, service is like is like the huckleberry jam on your PB&J. Of course peanut butter on its own is totally do-able, but add the compliment of that sweet, slightly tart taste of the huck-huck, and they’ll always come back for more.
That “back for more” bit is important, because while most drivers are only shopping for tires once every 60,000-70,000 miles or so, the oil changes, alignments and rotations in between keep their cars off the side of the road.
Here’s the kicker: Most of the service opportunities you offer require some kind of equipment investment on your end to get started. Now, that’s not true all the time – windshield wiper installation, for example, is a common service that can easily be done by hand. For some services, that upfront investment is small, like for oil changes. But alignments need an expensive machine, and if you plan to be a one-stop shop for the newest vehicles on the road, you’d better have ADAS calibration machines, most of which demand quite a bit of shop space to operate.
So, where do you draw the line? The data mostly goes the direction we expected, but you can’t draw a direct correlation between more complicated, necessary equipment equaling fewer services offered. Take a look at windshield wiper installation: 28% of shops surveyed say they don’t do these at all, and our data indicates that your average shop will do only about 11 of these in a week. It’s just that, well, a lot of people know they can do these on their own.
Oil changes tell another story. According to our data, your average tire shop is changing oil about 36 times each week, although 17% say they don’t offer this service at all – or at least nobody asks for it. But a solid 76% of shops say they change a vehicle’s oil somewhere between 1 and 76 times per week. To me, this makes sense. Oil changes are something a lot of customers have learned to do themselves. However, that doesn’t mean they always want to do it themselves.
Only 19% of shops surveyed told us that they have ADAS calibration equipment. Now, you might look at this and think “Wow, only one in five shops around me offers ADAS calibration, now’s a good time to invest.” But consider this: 20% of those shops that have the equipment don’t use that equipment on a weekly basis and 10% perform an ADAS calibration only once or twice a week.
Now, this isn’t to say ADAS calibration equipment isn’t always a good investment right now – one dealer even told us that their shop does 25 ADAS calibrations a week, after all. But like anything else, it’s important to assess the specific demands unique to your area before pulling the trigger.
Here’s the thing, though: Pretty much in line with tire replacement and tire installation services is alignments, the second-most profitable service for tire shops according to our data.
Alignments are a great profit center for tire dealers, coming in at an average of $107 a pop. After labor and initial equipment costs, that’s all direct to the bottom line; it’s not like you’re paying for new oil like you are with oil changes. On average, according to our data, tire shops are performing 14 of these a week, although if you live in Pothole City – I’m looking at you, any city in Northeast Ohio – you might be doing as many as 75 per week as one tire dealer told us.
Now, alignment equipment is evolving, and the latest and greatest falls into the “touchless” category. Since dealers are doing so well with alignments, we speculated a lot of those dealers may have invested in these touchless alignments systems, but that’s not the case. Only 13% told us that they have.
When you think about it, it does make a lot of sense. Nearly half of dealers, at 49%, said they didn’t need it based on cost, and 25% told us space constraints within their shop would prevent them from using one anyway.
You can look at the data all day, but when deciding to invest, the most important numbers aren’t our numbers, they’re your numbers. You might be that dealer performing 75 alignments a week – and if you’re watching, I salute you – or maybe you’re the dealer who told us you’re doing 300 oil changes a week – also very impressive. Focus on growing your profit centers, and look to data like this only to back up your assumptions, not to create a base for them.
For more business intelligence data to help boost tire dealer profitability, be sure to watch out for our next episode.