In spite of the swirl of change surrounding the tire retail market, the typical independent dealership in North America still derives most of its sales from tires, still generates more profits from service than tires, and still depends largely on newspapers for advertising.
The typical independent tire dealership among the largest 75 in North America—as profiled from data gleaned from Tire Business' 2000 dealership survey—operates 31 stores and reports annual sales of approximately $55 million, about 65 percent of which comes from retail sales.
The average sales per store in this year's survey was $1.2 million, unchanged from 1999. About 56 percent of a typical store's sales were from tire and wheel sales and related service, ranging from as low as 28 percent to a high of 100 percent.
Automotive service represented 36 percent, ranging from none at two of the top dealerships, to as much as 72 percent in one case. The rest was attributed to miscellaneous activities.
Automotive service continues to be tire dealers' better profit center, returning an average of 63 percent profit—nearly twice the 32-percent margin reported for tires and wheels.
A majority of dealers who responded to this year's survey said they spend more on newspaper advertising than any other form. Newspapers accounted for an average of 36 percent of the advertising budgets of the 39 dealers who provided data.
Radio and direct mail were the next most prevalent forms of advertising, at 15 percent each, just ahead of television, at 13.5 percent, and directories, at 8 percent.
Only three of the responding dealers said they use no newspaper advertising vs. four for radio and 16 for TV.