AKRON (March 27, 2006) — Independent tire dealers may not view auto dealers as a serious threat, despite the growing numbers of these outlets selling tires, but maybe they should.
At the very least, tire dealers should be careful in how they help this channel succeed.
The fact is car companies want their franchised dealerships to sell tires. It's a way of attracting customers to return to these locations for service work, especially after the warranty period has expired, and hopefully to eventually purchase a new vehicle.
To ensure their dealers do a good job peddling tires, auto makers have linked tire sales and service to the car dealership's customer satisfaction index (CSI)—a ranking by consumers on how well the dealership services their vehicles. “All ve-hicle makers have that scoring system now, and tires are an integral part of it,” according to Good-year's Jack Winterton.
The auto makers' efforts appear to be making headway. Tire sales through car dealerships have climbed 200 percent over the past five years, according to Michelin North America Inc. statistics.
Ford Motor Co. alone expects its franchised dealerships to sell about 3 million tires in 2006. At the same time, 914 out of 1,024 Toyota dealerships participate in the Toyota Tire Center Program.
This growth trend appears to have legs. Goodyear predicts car dealers will account for up to 6.5 percent share of the replacement tire market by 2010, up from an estimated 4 percent today.
As a further sign of the increasing stature of the car dealer channel, many tire companies have assigned dedicated sales people to service the segment.
It's true many tire dealerships supply the tires car dealerships sell, so the growth of sales through that channel does not necessarily mean a corresponding loss of business by tire dealers.
But car dealers are gaining experience and a comfort level selling tires, and there are other distributors, besides tire dealers, courting them as tire customers. Auto dealers also have a head start over tire dealers in their understanding and ability to service and recalibrate the Tire Pressure Monitoring Systems (TPMS) that now come mandatory on most of the vehicles they sell.
This is a service that tire dealers are just now learning to grasp. And they'd best do it soon. The last thing they want to do is send their customers back to a car dealership that's now in the tire business because tire dealers can't fix a tire-related problem involving TPMS.
Historically, independent tire dealers have overcome the challenges of new competitors, and there's no reason to think that won't happen again.
But car dealerships are a growing contender for the tire customer's dollar. Tire dealers should not lose sight of that.