Storing winter tires could offer boost for sales, profits

As you start to consider your winter tire order, keep in mind some dealers are moving toward a new service to boost sales and reinforce customer loyalty: seasonal tire storage.

There are no raw data, but anecdotal evidence indicates such storage is growing in popularity among retail auto and tire dealers.

"It's a great service for the dealership to offer," Kem Chowbay, retail fleet manager, Performance Acura in St. Catherine's, Ontario, said. "It also becomes a profit center for the dealership.

Mr. Chowbay introduced the concept to his dealership group a few years ago when Tire Resort — a full-service tire storage company with facilities in Brampton, Niagara and Stoney Creek, Ontario — was founded in Niagara Falls, Ontario. The service provides high-end storage, delivery, wheel washing, rim repair and refinishing. Mr. Chowbay estimated about 80 percent of dealership customers use the service, primarily those nearing retirement age.

The dealership pays $69.95 to the warehouse for each set of seasonal tires stored. Customers pay the dealership $89.95 per set and generally switch tires every six months.

"Demographics come into play," Mr. Chowbay said. "Clients that are (Baby) Boomers or have more income buy these luxury cars and need snow tires. But owners don't want to lug tires into their garages or homes, store them and then lug them back out."

The service not only continually draws customers back to the dealership but offers opportunities for additional service work.

"Statistically, the first opportunity for loss of a customer is tire sales," Mr. Chowbay said. "The reason is you think of Meineke, Midas, all of those drive-in services that offer multiple services and have lower labor rates. If people begin to use their services, you'll never see the customer again. Tire storage is something those shops can't offer."

Nick Fox, co-owner of Point S J&J Tire & Auto Service and Point S Capital City Tire & Auto Service in Helena, Mont., said even without auto dealer clients, his tire warehouse service does about $2 million in business annually at each of the company's two retail locations.

Customers primarily are those who run commercial fleets and private customers. They pay $60 for tire changeovers and $50 for storage.

"We are one-stop shopping," Mr. Fox said. "We inspect tires as they come through."

Customers are notified of flaws or damage to the tires and can have them fixed or replaced on site. Whatever the decision, tires are stored in climate-controlled warehouses with sophisticated inventory and fire/security systems.

Cory Hobson, service manager for Findlay Audi Reno Tahoe in Reno, Nev., said seasonal tire storage is a hit with his customers. At any given time, he has about 50 sets of seasonal tires stored for customers who paid $50 per set for the storage, mounting and balance.

"We have a lot of professionals coming in, and they have a good understanding that their time is worth more than saving $20," he said. "But the tire business is very competitive. If they're not satisfied, they'll leave and go elsewhere.

"Tire sales are at a low profit margin, so we have to think what we can offer that the other guy doesn't. That's seasonal tire storage."

There aren't any tire resorts/warehouses in his area, though, so the tires are stored at two off-site Findlay locations. That can create costly headaches in inventory management, though, so it's vital to stay on top of the details.

"There are lots of moving parts when you're handling all of these tires," he said. "If they aren't tagged correctly, someone can mistake them for old, used tires and throw them away. If they are a $1,000 set of tires that we made pennies on selling, we need to sell a lot more tires to make up for that mistake."

That's one reason the dealership doesn't advertise the service aggressively. If a tire resort was in the area, though, Mr. Hobson said he'd be more than willing to explore it as an option and increase his business.

Phil Maguire, owner of Maguire Family of Dealerships in Ithaca, N.Y., said he is not aware of any such tire storage services in his area. Although he chooses not to offer storage due to lack of space and liability concerns, he would consider a third-party service.

"Most dealers struggle with just checking 100 percent of tire wear on the cars already in our shops. The tire sales come from identifying the need and asking for the sale," he said, noting there are upsides to the service for some dealers.

"Storage isn't necessarily the initial traffic generator but it definitely would create retention once the customer was in the door."