AKRON-What can used tires do for your dealership? Actually, what can't they do might be an easier question to answer.
Used-tire trade-in programs can boost both volume and gross profits, as well as help independents compete against mass merchandisers, according to a number of Big O Tires Inc. franchise owners who operate programs in their dealerships.
``Guys that have done a good job (with used tires) have been doing it quietly for years and years and years,'' said Tom Staker, a Big O franchise owner in Madison, Ind.
Used-tire trade-in programs at a number of Big O franchises have increased dealership penetration in the budget market segment, increased new tire and premium tire sales, raised daily margins and offered consumers an attractive alternative to mass merchandisers.
Although Big O collects used tires from throughout the country, cleans them and stores them at its warehouses for sale to its franchised dealers, the key to successfully using used tires as a profit center lies in an effective trade-in program, dealers contend.
As part of a typical used-tire program, employees watch for common-sized tires that still have a legal tread depth. Usually a customer is offered about 50-percent of the used tire's resale value as a trade-in on new tires.
The used tires are then cleaned, priced and displayed in the showroom as part of a ``used tire'' display.
Wes Stephenson, who runs a used-tire program at all six of his Las Vegas-area Big O franchises, advertises his used tire program in a ``penny pincher'' advertising magazine to boost his penetration into the budget market segment. Others simply tell their customers about the program over the telephone or in the showroom.
Trade-in programs can also help sell more tires, sometimes luring a consumer seeking one or two new tires into purchasing a complete set, Mr. Stephenson said.
Offering a trade on tires to a consumer who came in for automotive service work can-as much as 30 percent of the time-convince that customer to purchase new tires, he added.
Mr. Staker has run his used-tire trade-in program since he bought the dealership from its previous owners about two years ago.
He agreed with Mr. Stephenson that used tires can boost overall new tire sales.
Furthermore, ``convincing someone they can get dollars instead of miles out of their tires helps take the edge off the price'' of premium tires in some instances, he added.
One of the more interesting benefits of a used-tire program, Mr. Staker continued, is its ability to offer consumers an alternative to mass merchandisers, discount clubs and large retail chains that don't take customer trade-ins.
``If (a customer) shops me first, and I say `Hey, these tires are worth $40.' Then they go up the street (to Wal-Mart) and they say `I'm not going to be able to give you anything for them; I might have to charge you a buck a piece to throw them away,' who has the appearance of ripping who off?'' Mr. Staker asked rhetorically.
The bottom line can be quite profitable on a used tire trade-inprogram, Mr. Stephenson said, noting each of his outlets averages 500 used tire sales per month.
But both Messrs. Staker and Stephenson contend serious effort must be placed in the program to make it fruitful.
Mr. Staker's program has its ``ups and downs,'' which he candidly admitted are based on the amount of time he spends working with his employees on the program.
``You've really got to assign one or two guys to keep it going,'' he said, noting all of a dealership's employees must be on the look out for good used tires. ``There's no sense in doing it just to break even. It has to be something you do all of the time.''
A second pitfall, he continued, is not keeping track of the amount of money spent buying used tires from customers and then reselling those tires at too low a price.