Every tire dealer knows that healthy profit margins are hard to come by in the retail and commercial tire business. The reason: the business of selling and servicing tires is so competitive that dealers often end up fighting for the customers' dollars by offering lower prices on their tires and then guaranteeing that low price in their advertising.
This serves only to lessen the perceived value of the tire in the consumer's mind while driving down margins, making it tough to make a profit on tires alone.
Specialty tires, the subject of a special report in this issue, are a niche segment of the tire industry that bucks this trend—offering dealers a growing market with profit potential.
Specialty tires, in general, are those with rim diameters of less than 13 inches. They are intended for such applications as lawn and garden equipment, golf carts, all-terrain vehicles (ATVs) and highway-speed trailers. They also may be used in certain industrial applications.
Surprisingly, while tire dealerships control an estimated one-half of the specialty tire business, many dealerships don't promote the fact that they carry these products. Often, they don't display them in their dealerships nor do they advertise their availability in the newspaper—one reason profit margins on these tires remain so high.
As a result, dealers lose out because many customers don't know they sell and service specialty tires.
As Rick McKinnish of Carlisle Tire & Wheel Co., put it: ``If a tire goes out on your lawn tractor, you don't shop in the paper.''
Many consumers are conditioned to go back to the equipment dealer or mass merchandiser when searching for a specialty tire. This need not be the case, however, if tire dealers would prompt buyers to associate specialty tires with their stores.
Customers should think first of tire dealers when purchasing a tire of any size. Dealers shouldn't relinquish any part of this important profit source to others without a fight.