GRAND BLANC, Mich.-Seeing literally billions of potential dollars slipping away, General Motors Corp.'s Service Parts Operations (SPO) is hoping a new retail tire program, on the launchpad nationwide, will have Goodwrench dealers rolling in dough.
Based on the theory that the majority of consumers have their cars serviced where they buy tires, GM has created the ``On-A-Roll'' program, in which retailing of tires will be added to existing service operations. The program was piloted throughout the last year at seven GM Goodwrench Service Plus dealer locations from Grand Rapids, Mich., to Grand Forks, N.D.
Those sites saw increases of between 83 percent and 170 percent in repair order growth, said Bill Maclear, merchandizing manager for GM Parts.
``The results have been outstanding,'' he said. ``The program was (meant) to increase customer satisfaction and influence their decision to buy their next car or truck (from GM).''
With the pilot program deemed a success, the auto maker's SPO unit plans on implementing the ``On-A-Roll'' program in 1,800 Goodwrench sites-all of which are in car dealerships-by the end of 2001 and beginning 2002 with ``a functioning plan,'' according to Mr. Maclear.
Though Mr. Maclear emphasized the importance of the new program in terms of keeping GM buyers in GM cars, keeping those cars in Goodwrench service bays is of equal importance. GM estimates it built 30 percent of the vehicles on the road, which potentially accounts for about $26 billion in annual replacement parts revenue.
But of that amount, GM's SPO only gets 30 percent of the GM replacement parts market. That accounts for about $8 billion in revenue. A boost of just 5 to 10 percent of that market could give GM a revenue injection to the tune of up to $2.6 billion.
These aren't the only reasons for the new program. Mr. Maclear said that GM estimates by the third year of ownership, 59 percent of car buyers are going places other than their auto dealer for service. ``I think that's where car manufacturers have rested on their laurels,'' he said.
According to GM research, 75 percent of consumers have their cars serviced at the same place they purchase tires, and 78 percent buy their tires from the person who recommends the tires. The research also indicates as much as 60 percent of a tire dealer's revenue comes from wheel- and under-the-hood-related services.
``In addition to the cost of tires, the average customer spends another $100 on parts and services,'' Mr. Maclear said. ``That's business we would like to keep in our dealerships. It's not because of the tire, but because of the process. They're inspecting your vehicle, and the idea is to look at areas of services that are not (requested) as well as the ones that are. Consumers like that aspect of one-stop shopping.''
Mr. Maclear said that the ``On-A-Roll'' program won't require physical changes to GM dealerships, but rather minor equipment additions. He added that stores will have to ``adopt process changes'' in the service line to accommodate new tire services.
The addition of 1,800 car dealer-based tire sellers throughout the country doesn't necessarily mean a huge hit to existing independent tire dealerships, Mr. Maclear believes. ``First and foremost,'' he said, ``it sharpens the competitive marketplace.''
The idea of a car dealer selling tires is nothing new. The launch of the ``Around the Wheel'' program of Ford Motor Co.'s QualityCare service centers served as the spur in GM's side.
``It was our intrigue with Ford and other manufacturers' intrigue with Ford'' that brought GM's program about, Mr. Maclear said.
He added that the long-term goal of the program could not be quantified, but the ultimate objective is to keep car buyers buying from GM. He said the program had not been under way long enough to tell if it has been or will be successful in that regard.
Participating Goodwrench Service Plus outlets will sell all original equipment tires prevalent to GM cars and light trucks. That primarily includes Bridgestone and Firestone, Continental and Goodyear. Mr. Maclear said the company would soon add Michelin, Uniroyal and BFGoodrich to the mix.