With three full years of selling tires under its belt, Serramonte Ford in Colma has seen overall service numbers increase, thanks to an extra nudge from tires, said Service Manager Rich Aug.
Ford Motor Co., which started its car dealer tire sales program in late 1999, got ``aggressive'' this year, launching a national campaign that is still expanding. That effort includes the dreaded ``4 for $99'' lure at many auto dealerships.
``That's the first time we've ever run that aggressive (of a promotion),'' said Charnita Kennedy-Williams, advertising and brand manager for Ford. She added that tires will be a focus for Ford through 2003.
But Ford isn't alone in new marketing pushes aimed at selling tires at its dealerships. General Motors Corp. in March launched a national campaign to promote its GM Goodwrench service. That follows a GM initiative to fold all of its dealers under the Goodwrench name-which means more dealers will be eligible to sell tires.
In all, 7,400 car dealers are now eligible, compared with about 3,400 when GM unveiled its ``On A Roll'' tire program in 2001.
Toyota Motor Co. dealers also are joining the ranks of tire retailers, with nearly 870 of its 1,200 dealers signed on.
DaimlerChrysler is working on a new tire program that is designed to provide better buying power for Chrysler dealers, a spokesman said.
``Every dealer would be encouraged or given the opportunity to participate or not,'' he said, adding dealers previously could sell tires on their own initiative.
Specifics of the new program will be released shortly, the spokesman said.
``We don't believe tire sales have been big on the bottom line over the years,'' he said. ``That's probably a reason (individual dealers) have not been in it...We think that will change very shortly.''
Ford has seen its retail tire sales grow 49 percent from 1999 through 2002, said Lori Etchill, light repair product team manager for the auto maker. Also, Ford's retail tire purchases in 2003 are up 43 percent compared with 2002 purchases, she said.
``We've gotten (the) Firestone (recall of 2000) behind us, and we're focusing more on the retail sales,'' she said.
Mr. Aug at Serramonte said his dealership had been selling about 400 to 420 tires a month from 1999 to 2001, but that recently has dropped to 260 to 270 tires a month. Many Ford Explorers-which account for most of the dealership's customers-are still riding on relatively new tires.
Russ Scibilia, marketing manager of GM's Service Parts Operations' tire program, said sales have increased each month since the program debuted, though he could not give specifics. GM dealers sell primarily those brands offered as original equipment on GM vehicles, including Michelin, BFGoodrich, Uniroyal, Goodyear, Bridgestone, Continental and General. Dealers are connected with a distributor to order their tires directly from the tire maker.
The idea behind the tire program isn't just about increasing the bottom line or padding service revenues, but also about retaining loyal GM customers. Mr. Scibilia said many dealers are signing on for that reason.
``That's a function of dealers becoming aware of the importance of tires in the customer retention process,'' he said.
Toyota also has seen success from its tire program, which began in earnest last year.
``We went from basically a handful of dealers to currently about 730 out of our 1,200 are in the tire business, which is phenomenal for us,'' said Bob Waltz, vice president of dealer operations in Toyota's customer services division. In addition to those 730 dealers, another 140 dealers participate in a tire program operated by the auto maker's Southeast division.
He said about 115,000 tires had been sold in the first three months of 2003.
Barry Steinberg, president of Direct Tire and Auto Service in Watertown, Mass., said tire sales at car dealerships is impacting the bottom lines for independent tire dealers. His four outlets sell Toyo, Cooper, Pirelli, Falcon, Michelin and Goodyear brands.
``It (has) cut into every retail tire business across the country,'' he said.
But he doesn't fault the car dealers or auto makers for their effort. Instead, he said the tire manufacturers have created the problem through the arrangements. ``They only care about tonnage,'' he said. ``They don't care about the independent tire (dealer).''
Mike VanSicklen, sales manager for purchase/resale, military and government for Bridgestone/Firestone, said relationships with auto makers are important for tire makers-especially considering 48 percent of consumers replace their OE tires with the same brand, according to surveys by J.D. Power & Associates. In addition, the increase of tire sales among car dealerships is inevitable, he said, noting that 10 percent of tire sales in Canada and 15 percent in Europe are from car dealerships.
But Mr. VanSicklen said BFS does not want that relationship to ruin the tire maker's tire dealer relations. He said safeguards-such as refusing to sell through unauthorized distributors and demanding that car dealerships get their tires from a local dealer after BFS negotiated a national price-are in place for that purpose.
``I love the business, but I won't sign a program with a car manufacturer if it means reneging on my commitment to my family channel (of tire dealers),'' he said. ``I won't do it. The family channel comes first.''
Roger Ferguson, general business director for Michelin North America Inc., said the tire maker is making tires available at car dealerships to tap customer loyalty to OE brands.
``Michelin flag brands have a very high loyalty rate, and therefore our car dealer customers experience a high demand for our brands,'' he said. ``For those consumers who utilize car dealers for all their vehicle maintenance, including tire replacement, we want to ensure Michelin flag brands are available.''
Spencer Carruthers, president of Kenwood Tire Co. in West Bridgewater, Mass., said he's not losing money to local car dealers, and he doubts if car dealerships will ever be significant tire retailers.
``I don't think that the dealers will ever be a meaningful source of tires,'' he said. ``I just don't think they want to get into it.''
But Bob Nudd, assistant service manager at Al Serra Buick-GMC-Hummer in Grand Blanc, Mich., said car dealers can be expected to tread further into tire sales in the future. Mr. Nudd, who worked for Goodyear for 13 years and also for Penske Auto Centers Inc., said many car dealers are wooing former tire industry specialists to do the job.
``If the (car) dealers are going to get to that next level, they're going to have to get into tires,'' he said.
Mr. Aug at the Ford dealership said most of the customers buying tires are regulars coming in for routine maintenance on their vehicles.
``People will come here, not in abundance, but people will come here just to get tires,'' he said.