We know tire and wheel services are convenience offerings that help keep dealership service customers from drifting away to independent shops. But balancing and rotating tires, fixing flats and selling replacement tires traditionally yield little to no fixed ops profit.
It doesn’t have to be that way.
Tire and wheel services can — and should — be profit centers at most stores. But, as with most revenue-boosting fixed ops strategies, increasing profits from these services takes investment in modern, automated equipment and a commitment to establish processes that service advisers and techs follow 100 percent of the time.
Here’s one reason why fixed ops directors should give investing in a state-of-the-art tire shop serious consideration: In the electric vehicle era, selling a customer a set of new tires and a four-wheel alignment may consistently be the highest-dollar repair ticket a shop writes other than body work.
With each announcement of an automaker’s lineup going full electric, tire and wheel services, I believe, become even more important because EVs require far less maintenance than internal combustion vehicles.
Want proof? Check the maintenance section in the owner’s manual of the Ford Mustang Mach-E. It’s three pages (out of 438) that detail items to check and inspect yearly, such as the vehicle’s coolant level and strength, hose clamps, suspension components, door weatherstrip seals, body drain holes, hinges, latches and locks, etc. Realistically, how many customers are going to upend their day and make service appointments for that?
I spoke with a dealer in West Virginia who is working to shift his store’s tire and wheel business into the profit column. He’s bought a tread depth scanner and spent around $30,000 on an automated tire-changing machine — Hunter Engineering’s Revolution. Since that unit was installed last fall, throughput has improved, and no tire techs have missed a day of work because of injury. The Revolution eases the repetitive strain of lifting pickup or SUV tires that can weigh as much as 95 pounds each. It also lets the tire tech multitask.
Coats, made by Hennessy Industries, offers the APS 3000, a changer that also offers some automation that reduces technician labor. You’ll spend around $15,000 for one of those. Coats makes a wheel balancer, the 1600, with a touch screen designed for easy, mistake-free use by inexperienced techs. “We have found a lot of dealerships are using lube techs to do tire services,” said Kyle Harris, Coats’ product manager.
Of course, tires themselves present the biggest challenge and opportunity. The profit margin on tires is nowhere near the roughly 40 percent markup on factory replacement parts. But again, there are ways to sell profitably.
Here’s one: Cleveland’s DealerTire has a unique program that embeds a tire retail expert in the service drive to work directly with customers, providing the same level of expertise found at Goodyear, Firestone and other independents.
“We partner with dealers to find someone in their local market who is rooted in tire retail,” Tim Hebron, DealerTire’s vice president of sales and field operations, told me. “We work with that dealer to put that individual on the drive. What that does is it forces the dealer to really focus on tires and other maintenance and light-repair items. It really raises the game and the knowledge level for all service advisers, not just the person selling in the lane on behalf of the dealer.”
The NADA Academy doesn’t offer a specific course on tire and wheel services — yet.
“I can see that being a valuable standalone,” says Camron Wilson, vice president of education and training for the National Automobile Dealers Association. “As we have been pushed by the pandemic to offer online classes, I can see that being a really great condensed course.”
Fixed ops experts agree that most dealers are leaving money on the table when it comes to tire and wheel services. In the EV era, every dime of service department revenue is going to be crucial.
“Think about when a car needs tires,” says Harris. “It’s right around the three-year mark. That’s when the car’s factory warranty is also expiring. At that moment, the customer is least loyal to the dealership because work is no longer free. That’s when you want to touch base with customers, letting them know you sell tires, checking their tread depth, telling them you will beat or match a competitive quote and letting them know you are not just their warranty work provider, but you are also their tire service center. That’s how you capture that work and retain that customer.”