AKRON-Canada's independent tire dealers are up in arms over a new program by which as many as 1.7 million consumers may be able to buy tires and automotive services at discounted prices as part of manufacturers' national account programs. The program most directly affects dealers handling Michelin, Uniroyal, BFGoodrich, Bridgestone, Firestone and Dunlop brand tires, which holders of credit cards from ``The Bay'' department store will be able to purchase at 30 percent off list price through a new auto club program.
If the program proves successful, according to its organizers, it may be expanded to also include holders of credit cards issued by Zellers Department stores.
Both The Bay and Zellers are owned by Toronto-based Hudson's Bay Co. Together, the two department store chains are estimated to have more than 2 million credit card customers potentially eligible to take part in the program.
However, dealers say they're most concerned about the precedent the program is setting in classifying individual tire buyers as ``national accounts.''
Paul Hyatt, president of Superior Tire Co. Ltd. in Scarborough, Ontario, wrote the three participating manufacturers, Bridgestone/Firestone (Canada) Inc., Michelin Tires (Canada) Ltd. and Dunlop Tires (Canada) Ltd., that ``this type of national account undermines the role of the independent tire dealer-the people you (the tire makers) purport to be in partnership with.''
A former president of the Tire Dealers Association of Canada who seems to be leading the dealer opposition, Mr. Hyatt blasted the three tire makers in his widely circulated letter for their complicity in what he called ``this divisive marketing program.''
The only parties likely to profit from the program, contend Mr. Hyatt and other dealers opposing it, are:
The Bay, an 89-store department store chain which is said to have Canada's largest credit card membership, with 1.7-million card owners;
Zellers, a 272-store sister chain of The Bay, to whose credit card users the program may eventually be extended; and
Canadian Vehicle Services (CVS), a Mississauga, Ontario, leasing firm whose owner, Ron Scheuer, created the program.
Dealers and other critics of the program speculate that the primary benefit it offers The Bay and Zellers, which lack in-house automotive service departments of their own, is the ability to compete with other large retail chains that do offer such services-particularly Sears, Roebuck and Co. and Kmart Corp.
In response, Mr. Scheuer blames much of dealers' concern on a lack of understanding about the program, which he said is still in a test-marketing stage that began last November, with a trial mailing to The Bay's credit card owners in the Toronto area.
Presently, The Bay is sending promotional material on the program to about 32,000 of its own employees. Once this testing phase is completed, which is anticipated by Feb. 1, the program is to be expanded nationally throughout Canada, he said.
According to Mr. Scheuer, tires and automotive services are only a portion of the products and services covered under the program, which also will offer its participants savings on automotive fuel.
Mr. Scheuer said all the details of the program won't become public until the program is launched officially, when The Bay will spend ``millions'' to introduce it.
Meanwhile, what worries Mr. Hyatt and other dealers opposing that program is the possibility it will spawn a rash of similar schemes granting national account status to individual consumers so tire manufacturers may sell to them directly, thereby reducing or eliminating the retailer's role in the transaction.
Under terms of the program as outlined in previous mailings, credit card owners are invited to take part in the company's ``AutoSavings Club,'' entitling them to a 30-percent discount on tires and a 7-percent savings on automotive repair and maintenance at participating retail outlets.
Most dealers say they'll have little trouble meeting-or even beating-these promised discounts on their own.
However, Mr. Hyatt likens the current situation to what occurred years ago when similar national account programs for truck tires were first introduced by manufacturers ``and dealers were being assured of profitable sales and extra volume.''
``That program eventually reduced the dealers' margins to meager earnings, once...manufacturers completed their program of selling direct to all of our customer base,'' wrote Mr. Hyatt in his letter. He said he sees history repeating itself, as tire makers attempt a similar ``end-run program'' in the retail sector.
Such sentiments also are voiced by officials of Canada's regional dealer associations, which are urging members to refuse to participate in the program.
Executive directors Olive Storey of the Western Canadian Tire Dealers & Retreaders Association and R.B. ``Bob'' Arthurs of the Ontario Tire Dealers Association complain that in addition to providing the customary tires and automotive service, dealers also are being asked to:
1-Telephone to obtain credit approval for each transaction;
2-Perform the additional required paperwork; and
3-Then wait 30 to 60 days before receiving compensation in the form of a credit from the manufacturer-a delay that association officials say will severely impede dealers' cash flow.
Ms. Storey said her association wrote all three manufacturers registering disapproval with the program, but only Michelin had responded to date.
She said Michelin told the Western Canadian association it had conducted a survey and found that most dealers were in favor of the program. However, ``when we asked for the names of dealers they contacted in our area, they couldn't give us any,'' Ms. Storey said.
``Most of our members are just boycotting it completely,'' said the Ontario association's Mr. Arthurs.
``As a matter of fact, I think it's going to backfire on The Bay and Zellers,'' he said.
``Michelin tires have been retailing at 35 percent off (list) in the Toronto market for years. So if the customer comes roaring in thinking he's going to get a big deal on Michelins, our member is just going to say: `Forget about the card. I'll sell you the tires for that price and install them and everything.'
``It's going to make that card look stupid,'' Mr. Arthurs said.
Not every dealer is opposing the program, however. Doug Moody, who owns a string of four Green & Ross franchise locations in the Toronto and Barrie areas, said he finds nothing particularly objectionable in it.
``It's no more onerous than other national account programs,'' Mr. Moody said. ``At least you know that when the forms are filled out correctly, you'll get your money.''
For his own part, Superior Tire's Mr. Hyatt said his dealership reluctantly will go along with the Bay program rather than risk turning away potential customers attracted by it. But once inside the store, customers will be offered other, more attractive alternatives, he hinted.
``We'll give the customer the best deal we can,'' he said, ``and it will probably be better than he can get with the Bay program.''