Judging from conversations we've had with tire dealers the past couple of months, 2010 was a fairly good year financially for most.
That's true even though tire shipments are still down a bit from 2007, the high watermark for shipments of replacement passenger and light truck tires to the U.S. market.
What that means is that some outlets are losing market share just by the fact that tire sales are still down somewhat.
At the same time, the popularity of using tires as a way of attracting consumers to visit or return to competing vehicle service locations continues to grow.
One franchise program tire dealers should be watching is Ford Motor Co.'s Quick Lane service operation. In the past 15 months alone, this service program—run by independent Ford car dealerships—has grown by 110 stores to 600 outlets nationwide.
Those stores sold a record million-plus tires in 2010, 40-percent more than the year before. Overall revenue among Quick Lane participants grew 25 percent.
Doing the math, the numbers of tires sold per store, per day—about a set or so—is not all that impressive.
Yet if those same locations continue to get more aggressive, something Ford is pushing them to do, and increase their tire sales to two sets a day, the number of tires sold through Quick Lane locations would quickly double to 2 million tires—3 million if they averaged 12 tires a day—and so on. The potential for Quick Lane's quickly becoming a major player in tires is easy to see.
Viewed another way, tire sales and service accounted for about 20 percent, or about $110 million, of Quick Lane's $550 million in sales in 2010, according to Ford. That averages out to about $110 a tire, based on 1 million tires sold.
That's $110 million not being spent on tires and tire service at independent tire dealerships, not to mention sales from other vehicle service work that might be performed at the same time.
Historically, independent tire dealers have held their own against other types of retail tire competition. Even today, they control roughly two-thirds of the U.S. replacement consumer tire market, although there has been a significant shift toward larger national and regional dealership chains at the expense of smaller single-outlet dealerships.
But the competition for aftermarket tire sales continues unabated, with not only Ford Quick Lane locations but tire operations at Chrysler, Nissan, Toyota, General Motors, BMW and other car dealerships all vying for the mighty tire-consumer dollar.
Tire dealers should not dismiss these, and other non-traditional tire outlets, lightly. They have the strength and might to grab lots of tire and service sales quickly and quietly.