WASHINGTON (March 13, 2006) — For any tire dealer who wants to pump up the bottom line, retail sales of items other than tires are virtually a must.
Generally, this takes the form of auto service and auto parts, for obvious reasons. “If you stay focused on selling all the items that are necessary to keep the vehicle on the road, you are increasing your bottom line, as well as providing stellar customer service,” said Doug Swanson, president of Modern Auto Care Inc. in Eden Prairie, Minn.
Sometimes, however, a retail or commercial dealer will take the retail side of his business one step further. While no dealer seems to stray too far from the template of vehicle parts and service, some may find a lucrative sideline in such areas as recreational vehicles, vehicle mobility customization for handicapped drivers, towing, or even providing tires for golf carts and lawn mowers.
Testing the RV market
Marlboro Tire Inc. operates out of a 12,000-sq.-ft. building in Upper Marlboro, Md. President Mike Kress owns the building, and in half of it he has the dealership's tire, auto repair and medium truck service businesses. For the past seven or eight years, he has rented out the other half to a tile and marble business.
This spring, the tile and marble company plans to move to larger quarters. That was perfect timing for Mr. Kress, because it's about that time that he plans to move his new recreational vehicle (RV) business into the other half of his building.
The idea of an RV dealership started when Mr. Kress's son bought a 30-foot trailer that had a little problem with its frame.
“We saw the service situation in our area and figured there was a need for another dealership,” Mr. Kress said. “We looked at the other dealerships in the area and figured we had both the building and the space to start our own dealership. On top of the building space, we own two adjacent acres of land.”
Mr. Kress said his initial inventory will consist of travel trailers and fifth-wheel vehicles; he plans to branch into motorized units later. He is talking to four different RV manufacturers to provide him with inventory.
Any new business is a gamble, but Mr. Kress told Tire Business he is confident the new venture will be a success. For one thing, he has re-searched the market and knows it will support a new RV dealership; for another, he has 40 years' experience in selling tires and servicing cars and medium trucks.
“What you learn in the tire business, you can apply to any business,” he said.
Based in North Brunswick, N.J., Brunswick Automotive & Mobility Professionals Inc. is a full-service tire and auto repair facility that proudly advertises an enormous range of repairs and services performed by ASE-certified technicians.
The service of which Brunswick Automotive & Mobility is proudest, however, is right there in the company's name. Its Brunswick Mobility Professionals division specializes in the installation, repair, maintenance and sale of every type of adapted vehicles and adaptive equipment designed to increase the mobility of handicapped motorists. Wheelchair lifts, ramps and hand controls are only some of the equipment in which Brunswick Mobility Professionals specializes.
“If you really understand the client, you know that he relies on you for his independence,” said Bob Schickler, president of Brunswick Automotive & Mobility, who co-owns the business with his twin brother Len, the vice president. What makes Brunswick Mobility unique, Mr. Schickler said, is that it services the vehicles it sells and modifies—something that most such companies don't do.
Tires are a crucial part of the service Brunswick Mobility performs for its clients, Mr. Schickler pointed out. “I give them four run-flat tires, and they'll never have to worry about a flat,” he said. The company is a member of American Car Care Centers Inc.'s dealer network and carries ACCC's brands of tires, he added.
The Schicklers got into the mobility business 15 to 20 years ago, he said, because of a close friend whose son was born with spina bifida. The son eventually went to work for a company that manufactures vehicle wheelchair lifts, and he persuaded the Schicklers to accept a New Jersey distributorship.
The rewards of being in the mobility business are “outrageous,” in Mr. Schickler's words, and not just monetarily, although he estimates it's added 50 percent to his company's bottom line. For its clients, he said, Brunswick Mobility is like part of the family.
“It's a niche market, but it's something I take pride in,” he said.
The spice of life
Lackey Sebastian Jr., owner of Lackey's Tire & Tow in the Dallas suburb of Seagoville, Texas, estimates that each of the three parts of his business brings in about one-third of his annual sales. Tires—including not only Cooper passenger and light truck tires, but small tires for golf carts, lawn mowers and similar vehicles—account for one-third. Auto service accounts for one-third. And towing, a standby of Lackey's Tire & Tow for 20 years, accounts for one-third.
Included in the store's mix are batteries, service calls and even kerosene for space heaters.
“Variety is the spice of life, as you know,” Mr. Sebastian said.
Lackey's Tire & Tow got into small tires about two years ago, when a salesman for a small tire company contacted Mr. Sebastian.
“He said that with my money and his expertise, we could make some money,” he said. “He made some money, that's for sure!” Mr. Sebastian estimates that small tires bring in about $30,000 gross every year.
In season Lackey's Tire & Tow has about 300 small tires in stock, according to Mr. Sebastian. “You can't keep four or five in stock and expect to sell any,” he said.
As for towing, Mr. Sebastian said, “It's been a big asset for me.” Maintaining a fleet of tow trucks is an expense, he added, “but if it's done right, the profits make up for the expense.”
Lackey's Tire & Tow is doing so well, in fact, that Mr. Sebastian is on the verge of opening a second outlet in nearby Terrell, Texas. “I'm waiting on a Super-Target (store) to go in there,” he said.
Mind the gaps
The rewards of expanding your retail offerings are obvious: Besides adding significantly to your bottom line, you can also get clients through the door you wouldn't have attracted otherwise, and who may just decide to buy tires from you, too.
But there also are pitfalls for the unwary, noted an industry executive who asked to remain anonymous.
“Like anything else, you certainly have a capital investment that goes along with (entering a new retail line),” he said. If you don't know how to serve that clientele, you can end up losing that investment, he said.
“Also, you can focus on one part of your business, and take your eye off the ball for the other part. If you take your eye off the ball in your main business for one second, you're in trouble.”
If your dealership is part of a franchise operation, it's also important to know what the franchisor will allow in the way of retail sales, according to a spokesman for Big O Tires Inc. in Centennial, Colo.
“All goods and services have to be approved here at the corporate office,” the spokesman said, noting that goods and services offered at Big O stores have to be standard to cover the warranties from store to store.
Knowing your regional market also is important, according to the Big O spokesman. “(Custom) wheels are bigger in California than they are in Iowa,” he said.