WASHINGTON (Sept. 26, 2005) — Independent tire dealers are used to competing with new-car dealers in auto service and repair, but in the past few years they have faced them as growing competition for customers' tire dollars, too.
“Definitely we see ourselves in competition with independent tire dealers,” said Doug Stein, parts sales and marketing manager for Toyota Motor Sales USA Inc. “Why wouldn't we?”
Along with Ford Motor Co., General Motors Corp. and DaimlerChrysler L.L.C., Toyota offers a program which facilitates franchised dealers selling and servicing tires at retail. About 860 of Toyota's 1,200 dealers nationwide participate in the program, according to Mr. Stein.
“Price is always an issue, but convenience, reputability and dealer service are extremely important,” he said, explaining why he thinks car dealers have a leg up in this market. “Most customers who go to an independent dealer will be sold the tire that dealer has in stock. Our dealers know the tires on Toyota vehicles better than anybody (else), and their expertise will ensure the quality that customers are looking for.”
On the other hand, virtually every major tire maker now sells tires to car dealerships, but most of them use their own independent dealers as part of that supply chain. To Thom Peebles, general business director of Michelin Americas Small Tires (MAST) who has responsibility for his company's car dealer channel, a tire dealer who helps supply tires to a car dealer is expanding his business, not helping out his competitors.
“Participation is really driven by the fact that both types of dealers win,” said Mr. Peebles, who oversees a program that provides Michelin, BFGoodrich and Uniroyal tires to Ford and other dealers. “Independent tire dealers expand their distribution business. New car dealers can leverage tire mounting as another service to enhance the value of their dealership locations.”
All four auto makers spoke enthusiastically of their tire retail programs, though they varied as to the number and content of details they revealed about their individual programs.
The MAST tire brands, for example, are only three of 12 Ford purchases for its “Ford Around the Wheel” tire program, according to a Ford spokeswoman. The other brands are Goodyear, Dunlop, Republic, Continental, General, Hankook, Pirelli, Yokohama and Mohawk.
“We don't get into specifics on how suppliers are chosen, but I can tell you that we are always looking for additional ways to provide value to our dealers and customers,” she said.
More than 4,000 Ford and Lincoln-Mercury dealerships participate in Around the Wheel, the spokeswoman said.
“Our dealers are in the retail tire business to provide a one-stop shop to their customers for all of their service needs,” she said. “This is a key business initiative for our dealers to retain customers long-term.”
GM's Goodwrench Tire Program is in place at a majority of GM dealerships, though a spokesman for the car maker declined to give an exact number. The company goes through several large tire distributorships nationwide to supply car dealerships with Goodyear, Dunlop, Bridgestone, Firestone, Continental, Pirelli and Michelin tires, he said.
“We expect these distributors to provide GM dealerships with timely delivery of OE tires, technical and sales training, inventory management assistance and prompt invoicing of tires purchased through the program,” wrote Jeff Quigley, director of the Maintenance and Repair Business Line at GM Service and Parts Operations, in an April 11 letter to Tire Business.
DaimlerChrysler started rolling out its Mopar T.I.R.E. Works program to dealers nationwide two years ago, and the company is ecstatic about the dealer response, according to a company spokesman.
“More than 3,000 dealers have signed on, and sales have grown from 100,000 units in 2003 to 700,000 this year,” he said. “Of course we couldn't have done it without our dealers and the tire manufacturers who are in-volved.”
There are two levels of service in the T.I.R.E. Works program—Basic and Plus. The main difference between the two is that the Basic program supplies tires through local independent tire dealers, whereas Plus members receive their tires exclusively from Dealer Tire L.L.C., a Cleveland-based distributor that exists solely to supply tires to auto dealerships.
Dealer Tire is operated by the former owners of Cleveland's Mueller Tire & Brake retail tire chain, which was acquired in 2002 by TBC Corp. It also supplies all Toyota dealers with tires, Mr. Stein said. Toyota makes sure its dealers get the tire service training they need, he added, suggesting that that was one of the main reasons why they didn't enter tire retailing before.
“Dealers had limited motivation to get into the tire business until we started our program,” he said. “There was a lack of comfort with the product, so we help increase the comfort level with such things as changing a tire or writing a tire warranty.”
Asked what Toyota planned to do to expand its tire program, Mr. Stein said: “We don't force our dealers to do anything. Instead, we encourage them by showing them the benefits. As participating dealers achieve certain objectives, we all keep our eye on the goal, which is increased customer satisfaction.”