Profit centers — improving margins through efficiencies

AKRON (April 16, 2014) — In times of tightening profit margins, tire dealers and auto service providers look for every edge they can find to claw back some of the margin.

In some cases, savvy dealers are finding a few extra points of margin and/or additional revenues by improving productivity in their service bays, achieved by trimming valuable seconds from steps along the way — from the time the vehicle enters the lot until it's ready for the customer to pick it up.

The secret to some improvements is automation, such as shorter lifting and lowering times or “on-the-fly” tread profile measurements for quicker alignment assessments.

The first of these, shorter lift times, is the purview of Rotary Lift, whose “Shockwave” lift technology promises to cut the time needed to lift or lower a vehicle in half. The firm's literature claims a 25-second lift and 19-second descent time.

Launched in 2011, Shockwave lifts found favor initially with car dealers, Rotary Lift said, but more recently Cincinnati-based Tire Discounters Inc. has begun installing the lifts in all of its new stores and in stores being remodeled.

It wasn't a slam-dunk decision, however, according to Forry Hargitt, Tire Discounters' director of sales and operations.

“I went to a car dealership that had the Shockwave-equipped two-post lifts installed, and I talked to the technicians about how much they liked using them,” Mr. Hargitt told Tire Business. “Once I saw the lifts in action — how easy they were to set up and how fast they got the cars in the air — it was a no-brainer to put them into our stores.”

The Shockwave design also offers savings in other areas, such as the use of 110-voltage instead of 220, which eliminates the need for extra 220 wiring, Mr. Hargitt noted. Rotary Lift claims dealers can save roughly 80 percent on the cost of electrical installation.

The lifts get power from two standard 12-volt auto batteries that are charged by the 110 hookup, cutting electricity costs and allowing the lift to operate even during power outages.

Replacing mid- and low-rise lifts with the Shockwave two-post lifts gave Tire Discounters “added functionality and allows us to use the bays as full-service bays instead of just for tire work,” Mr. Hargitt said.

“Now we can do tire work, brakes, oil changes, suspensions and other service work right in the same bay. It becomes a complete profit center. The technicians love the Shockwave lifts. The techs are more efficient, they're making more money and they're getting the customers in and out quickly.

“That's the win for us: being able to more efficiently get the customer in, out and back on the road.”

Mr. Hargitt declined to quantify Tire Discounters' direct savings from using the lifts, prefering to focus on customer satisfaction while looking at it in the long-term, he said. “Finding ways to raise customer satisfaction should translate into more repeat business and pass-along recommendations.”

In its literature, Rotary Lift offers a calculation that shows using a Shockwave lift could save 2.7 hours of work a week vs. a conventional lift, which could translate into $5,000 or more of potential additional profit a year, depending on prevailing wage rates.

The system can then provide a four-color printout of the vehicle's tires that can be used to show tread depth and any irregular wear patterns to the owner.

TreadSpec is a development of Tire Profiles Inc., an Elk Grove Village, Ill., company formed in 2008 as an offshoot of a South Carolina-based railway diagnostics company called ImageMap. The firm had developed diagnostic measurement systems for railway infrastructure and rolling stock.

Like Shockwave, the TreadSpec concept has to date been adapted more quickly by new car dealers, in large part because many car dealers have drive-through service bays that can accommodate the roll-over TreadSpec diagnostic units more easily, according to David Boyle, chief operating officer of Tire Profiles.

The scanning units use lasers sourced from Switzerland that are classified as FDA-CDRH Class II, Tire Profiles said — that is, there are no special user requirements. Tread depth accuracy is better than 1/64th inch (± 0.4 mm).

Because Dunn Tire doesn't have drive-through bays and because of its location in western New York and Pennsylvania, Mr. Schroeder said, the dealership brainstormed with Tire Profiles' engineers, coming up with an idea they're calling “Trans Scan.” The TreadSpec unit is built into a 22-foot metal shipping container that is designed to be portable.

The container is set up to allow customers to drive through on their own. It will accommodate four-wheel vehicles — no “dualies” — up through a Ford F350-size vehicle before they park and go into a store, Mr. Schroeder said. The unit is equipped with video cameras to capture license plates, so the counter person is able to have the customer's tread inspection report ready when he or she comes in.

“We also have a ‘preferred customer card' program in place,” Mr. Schroeder said, “and the units will have a card reader to facilitate matching the scan with the customer. The system is designed to send the customers an email automatically with the scan details so they should have the information before they get parked.”

The unit also will have a display screen above the exit that will show the scan, he added. The display and printout will show green, yellow or red for each wheel position, indicating no attention needed, let's take a look or attention definitely required, respectively.

“The TreadSpec scan is not meant to replace a visual inspection totally,” Mr. Schroeder said, “because the scan sees only a small section of the tire. We'll also do a visual inspection once the vehicle's on the lift to check for flat spots or nails, screws, etc., but the printout is a great starting point for engaging the customer.”

The system also will allow Dunn Tire to create an alignment and tire condition history that can be updated each time the customer visits, he added.

From a productivity, and earnings, point of view, the system should free up an experienced alignment technician from having to do initial inspections, Mr. Schroeder said, and allow that tech to concentrate on higher valued-added tasks.

Dunn Tire first approached Tire Profiles nearly two years ago, Mr. Schroeder said, at which point he and other Dunn executives visited area car dealers with the units to assess their capabilities.

The first Trans Scan portable unit was on display at last year's Specialty Equipment Market Association show in Las Vegas, and Dunn Tire is ready to install the first units at two of its stores this month.

Mr. Schroeder expects the dealership will test and evaluate the units for about 90 days before deciding whether to order more. The plan is to have them at the high-volume outlets first, he added.