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December 05, 2002 01:00 AM

Tire pressure monitor sales can boost profits, firm says

Bruce Davis
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    LAS VEGAS (Dec. 5, 2002) — Tire dealers who choose not to sell an aftermarket tire pressure monitoring system could be turning their backs on a hefty boost to the bottom line.

    Selling just five systems a week—at a cost to the customer of less than $200 per installation—could boost a dealer's annual income by thousands of dollars, according to Michael Landers, president of Algonquin Scientific. The company developed the TireSafe pressure monitoring system, which was launched to dealers at the International Tire Expo in Las Vegas.

    Driven by the requirements of the Transportation Recall Efficiency, Accountability and Documentation (TREAD) Act, demand for aftermarket tire pressure monitors is expected to take hold in the coming years.

    According to the requirements of the TREAD Act, as many as 1.7 million 2004 model year cars will be equipped with a pressure monitoring system, with the number rising to 6 million in 2005 and 17 million in 2006.

    This rapid growth in fitment of monitoring systems at the original equipment level will raise interest among motorists for retrofitting their other, older vehicles with a system as well, Mr. Landers said. And there are more than 160 million cars, light trucks and sport-utility vehicles on the road in North America today without a tire pressure monitoring system (TPMS).

    Looking at it another way, there are 87 million tire purchase decisions made annually. Just capturing a fraction of those, he said, would mean a measurable boost in revenue.

    “So there's considerable potential in the marketplace,” Mr. Landers said, “and if tire dealers don't come on board relatively early in the demand curve, they risk losing out to car dealers and others.

    “Just look at car dealerships today,” he continued. “They're looking to raise their revenue per store,…and that means finding ways to make their customers captive customers.”

    Algonquin Industries “stumbled” into the TPMS market in the mid-1990s when the company acquired patented technology and hired the inventor. Now five years and $5 million in development work later, the product is deemed ready for the market, Mr. Landers said.

    Algonquin has taken a rather savvy approach to this market, choosing to test the consumer waters in lower profile markets such as recreational vehicles, boat and horse trailers etc.

    Vehicle owners in these segments are more likely to spend a little extra to protect their investments, and they're also more likely to embrace a safety device for their other vehicles if they're convinced it works on their RVs or trailers.

    Recognizing that there already are several systems on the market, Mr. Landers said Algonquin chose to offer a product that's functional, reliable, affordable, and will help a tire dealer improve his bottom line.

    TireSafe differs from other radio frequency-based systems in that it uses a relatively low frequency—only 33 kilohertz vs. 500 megahertz for other systems. This means the system requires a receiving unit mounted near each wheel, but also means rotating tires has no effect on the system's ability to do its job.

    Installation of the TireSafe wheel units is simple. They are attached to the wheel by an adhesive rated to withstand 140 pounds of force; the centrifugal force on the 500-gram sending unit at 135 mph is 9 pounds, Mr. Landers said. This attachment design requires no metal strapping or other secondary attachments. And at only 500 grams, tire balancing presents little if any problem, the company said.

    It should take a qualified mechanic about 45 minutes to an hour to install a system in a passenger car, Mr. Landers said, since TireSafe receiving units need to be mounted over or next to each wheel and then connected to the dashboard warning lights.

    Since the system requires a unit near each wheel, TireSafe monitors the pressure in each tire individually, and the display unit tells which tire specifically to check. The system can monitor up to 34 tires using an in-cab display, Algonquin said. For the passenger car/light truck/SUV market, the company offers a basic four-wheel solo package along with a four-wheel deluxe, which allows the user to expand the system's capability to a trailer.

    The company's system for trailers uses warning lights mounted on the trailers' fenders so they can be seen by the driver in his/her rear-view mirrors. The lights start flashing if there's a problem.

    The batteries in the sending units have a 10-year lifespan, but Algonquin recommends changing the sending unit whenever the customer puts on new tires. A sending unit likely will cost about $20 at first, but the price may come down as production of them goes up.

    “It's a safety issue,” Mr. Landers said. “We, the tire dealers, should look at it as helping protect the consumer from harm's way.”

    Algonquin also recommends dealers make sure car owners leave with an extra sending unit or two in their glove box for emergencies on the road. The company believes the installation is simple enough that a qualified tire technician should be able to install a new sensor from an instruction card included with the extra sensors. A dealership could either package the extra sensors with the purchase, or sell them separately.

    Algonquin has launched TireSafe three times, but withdrew the product on all three occasions after problems in the field cropped up, Mr. Landers said. The company is confident it now has the product market ready.

    Algonquin recently got a boost in credibility when Bombardier Transportation Systems—the Canadian manufacturer of aircraft, trains, buses and marine and recreational vehicles—selected TireSafe for its airport transit systems vehicles.

    Algonquin Scientific is part of the Algon-quin Group of companies, which has been supplying the automotive industry for more than 30 years. Among its products are the retractable running boards on Lincoln Navigators and other exterior cladding components.

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