Current Issue
Published on June 18, 2001

Opinion

Don't take GM program lightly

As if independent tire dealers don't have enough competition, along comes General Motors Corp. with plans to establish a new retail tire program at 1,800 Goodwrench Service Plus dealer operations.

GM's move means another potent competitor for tire dealers and marks the second major auto maker, after Ford Motor Co., to aggressively enter the retail tire business in the past three years. When added up, these Goodwrench locations and the 3,500 Ford dealerships total more than 5,000 new retail outlets where customers can purchase tires and have them serviced.

The scary part for tire dealers is not the number of new competitive locations, but whether GM and Ford dealerships can successfully steal their customers.

In setting up its On-A-Roll tire program, GM noted that by the third year of vehicle ownership, 59 percent of car buyers are going to places other than their auto dealership for service. GM hopes to recapture some of that business with the help of this new program. These are customers independent tire dealers must work to retain.

Most vehicle warranties end after three years, and many owners then opt to patronize independent service shops which typically offer lower prices and often are more accommodating to customers needing immediate service.

In our opinion, this is where the battle for these customers will be fought.

GM has found through its research that three out of four consumers have their cars serviced at the same place they purchase tires, and 78 percent buy tires from the salesperson recommending them.

Offering tires also appears to bring in more service sales. At the seven pilot Goodwrench Service Plus locations, auto repair orders increased from 83 to 170 percent as a result of the program, GM said.

That's why the auto maker wants to capture a share of the replacement tire business and why tire dealers must fight to keep it.

Tire dealers have the edge in this competition, we believe, because of their long experience and understanding of tires and tire sales. Combined with a willingness to do whatever it takes to satisfy customers, this makes tire dealers tough to beat. But dealers cannot-and should not-become complacent.

Let's hope hikes stick

Higher tire prices should be good news for both tire makers and dealers alike. But what too often happens in the tire industry is that a competitor comes along and offers a better deal, negating the increase. With rising raw material and higher energy costs, these latest price increases are much needed.

Here's hoping common sense prevails and the price hikes stick-for both tire manufacturers and dealers alike.

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