Tire prices

It's not most of my tires by any means but two different tires I looked up this week were 30$ cheaper than what I could buy them for. Might just be a run of bad luck. I'm not going to put the specific supplier on blast because I checked with multiple suppliers and they were all priced the same. My customers expect me to match prices so I guess this week it was just the cost of doing buisness.

I took a different approach. I RAISED the price of my tires. My service advisors quote the price and let the customer know we will be more expensive than Tirerack etc but that we can have them on the car and ready to go at the time we promised all the other work to be done. We promote the convenience of it. Our tire volume is down and overall profit on tires is up. Headaches on tires are now nearly nonexistent. It was a risky move but has worked out for us well.  

we sell tires at 30.00 over cost to remain somewhat competitive , it works well , convenience is a big thing to , the customer can just have all done here at one time instead of bouncing all over town looking for a "deal" we sell more than we lose. 

Jeff

Re  "My customers expect me to match prices so I guess this week it was just the cost of doing buisness."

I HOPE you meant your customers would like you to match prices. I tell my customers I can't match Walmart's buying power. I say it with a finality and move on to something else. Everybody knows you have to make a profit.  If they still want/hope you to do it for free, do you really want that type of customer? Or, are you being too nice and helpful, at your expense?

I do not stress over tires. The profit per hour is not worth chasing in my small shop. I offer them so my customers know they can one stop shop, but I refuse to try to compete with chains, it is not possible.  That being said, if everyone reading this joined me in a buyer's group to grab certain sizes then we could make something happen.

We see this from time to time but once we explain to the customer that they are getting a club tire. Even though they say Goodyear or BFG on them they are made to the big box store spec’s and are not the same tire that they would make to sell in a retail store or to a tire distributor. We also point out that the big discount chain stores do not provide the same level of service they we do and if they have a problem with a tire we will be there to help. Do they even know who they talked to in Walmart or who to talk to about a tire problem or concern after that we make the sale.

We've found that making money on tire sales requires a unique approach. Volume definitely helps, but it is not a requirement to become more competitive and increase margins at the same time. 

In order to compete with the clubs, chains, and internet retailers you have to be in a position to buy tires when terms are favorable instead of waiting until a customer walks in the door and asks for them.  

For example: A customer walks in and requests a set of P215/55R17 H-rated Michelin Defenders. You check with your local distributors (probably ATD, Carroll, and TCI) and find that your purchase price today is $130 +/- at each one of them. You add 20% and come to a price of $156.00 per tire before installation. But what if you had them in stock with a cost basis of $90.00 per tire? You could now add 50% and sell them at $135.00. Now all the other shops in town are wondering how in the hell are you selling these tires that close to cost. 

First - By being enrolled in manufacturer programs you can make money when you buy the tires and not just when you sell them (so far this year we are averaging $23.76 per tire cash back on Michelin and BFG tire purchases). 

Second - Developing a good relationship with one distributor over the others will get you the best pricing they can possibly offer as well as access to any partner programs they have to accompany the manufacturer programs. Plus, if they know that you have their products on your shelves and that your are willing to purchase in quantity from time to time they will call you when a good deal comes along.

Third - This is the culmination of the work put into step one and two. There will be times when a manufacturer decides to offer an extra 3% to their normal payout for the month or quarter and that distributor you have developed a good relationship with is going to chip in an extra $5.00 per tire if you buy 50 during the same time frame. This is just a hypothetical example, but there are good purchasing opportunities similar to this several times every year. This is the time to buy as many as you can expect to sell for the next 90 days. This is how you get a cost basis of $90.00 on that Michelin tire I mentioned above.

Of course not every shop has the space or capital to dedicate to tire inventory or the time to research all the associate dealer programs available, but if you can there is actually a lot of money to be made out there.

Not really interested in spending money on standing inventory, even at a good deal, hoping someone comes in matching the need OR marketing to sell my tires I bought. We can't compete with the box stores. I'm not sure if the big tire outlets have tires with the same names and different specs but I suppose they could. Rarely but on occasion, I find a tire buyer who claims their priced tires were less than what I can buy them for to which I advise - go get them. When they're installed, come see me for the alignment and rotation if you want them to last and don't want to wait. I raised my tire prices to reflect what they're worth to MY business and I've reduced my tires to a manageable number. Less headaches, better margin. If I've had a 100 phone callers for tire prices this year guess how many end up buying here? 

To each their own 3Putt. The tire sales industry and the automotive repair industry are really two different types of business and they each require different approaches. 

I have been in the retail tire business my entire adult life and have seen/tried different methods for purchasing, marketing, pricing, and warehousing tires. This method has been far superior to any other. It is definitely more difficult and requires large amounts of time, effort, and capital. This strategy is the best way to grow tire sales for those owners/managers out there that wish to do so and are willing to invest the required time and effort to educate themselves about the products themselves and the consumer psychology that drives tire purchasing decisions. Yes, we do have marketing campaigns in place, but I never have to hope someone is going to come in needing the tires I have.

Good stuff, Jhamrick. My tire business is about 10% of my service mix. If I get too much higher it cuts into my overall margin too much. When I have competitors guaranteeing lowest price, Fleet Farm, Sam's, Discount Tire, Walmart, and Big O within a few miles of my shop I just don't try to fight to the bottom of the price barrel. I explain to those that will listen that our service is superior, benefits and ease of doing business with us great, convenience stellar, but most calls and drop-ins are looking for price first. My good customers see the value and we convert some. 

Do you know if what Sam's and Discount Tire sell are the same tires as what we buy? Someone here alluded to the specs being less than but I can't imagine the Bridgestone making a diluted product to help the box store business model make more money. I assume they just buy so much they can negotiate great pricing AND they strategically take losses or less margin on tires to sell more profitable product. 

10 minutes ago, 3PuttFever said:

Good stuff, Jhamrick. My tire business is about 10% of my service mix. If I get too much higher it cuts into my overall margin too much. When I have competitors guaranteeing lowest price, Fleet Farm, Sam's, Discount Tire, Walmart, and Big O within a few miles of my shop I just don't try to fight to the bottom of the price barrel. I explain to those that will listen that our service is superior, benefits and ease of doing business with us great, convenience stellar, but most calls and drop-ins are looking for price first. My good customers see the value and we convert some. 

Do you know if what Sam's and Discount Tire sell are the same tires as what we buy? Someone here alluded to the specs being less than but I can't imagine the Bridgestone making a diluted product to help the box store business model make more money. I assume they just buy so much they can negotiate great pricing AND they strategically take losses or less margin on tires to sell more profitable product. 

At one time they did. They had tires made to their specs by major tire company’s. Usually retired molds. Now they just sell the same tires. Walmart still has a few of their own such as the Goodyear Viva 3. As a goodyear dealer I can not even order that tire.

You are correct 3Putt....Bridgestone and the other major manufacturers will not dilute the product they sell to us for the big box stores and Truett is also correct in that they may make a separate product line such as the Goodyear Viva specifically for Sam's/Wal-Mart. Which manufacturers are willing to build the "club" tires specifically for the big box stores has varied over the years. Currently Goodyear and Cooper are the primary offenders, but Yokohama, Pirelli, Continental, General, and others are guilty of it as well. 

12 hours ago, Truett said:

At one time they did. They had tires made to their specs by major tire company’s. Usually retired molds. Now they just sell the same tires. Walmart still has a few of their own such as the Goodyear Viva 3. As a goodyear dealer I can not even order that tire.

I've got a question for you Truett....As a Goodyear dealer how do you anticipate Goodyear's distribution changes to affect your business? Is the withdrawal from ATD and creation of Tirehub seen as a positive move for Goodyear dealers? Are there any concerns that as Goodyear gains greater influence over distribution channels that they will increase purchase prices? 

11 hours ago, jhamrick said:

I've got a question for you Truett....As a Goodyear dealer how do you anticipate Goodyear's distribution changes to affect your business? Is the withdrawal from ATD and creation of Tirehub seen as a positive move for Goodyear dealers? Are there any concerns that as Goodyear gains greater influence over distribution channels that they will increase purchase prices? 

I don’t see their current move with TireHub as causing any problems for me. As for distribution they only are looking at the large city’s like Chicago, New York , LA, Indy and such. They are using the old wharehousing systems they still have in place. Smaller markets will still be supplied by regional distributers.

ATD is one of the largest distributors in these large cities and therefore were in direct completion with TireHub.

This is just a continuation of what Goodyear started 3 years ago when they moved to sell Tires online, ship them to us, and have us install them. We only get aa minimal delivery fee (about $5) and have to install at the price Goodyear sets. We have to buy the tires, do the work and we get a credit back from Goodyear. Any problems the customer has they have to back to goodyear as they have charged their credit card. But the ustomer blames us for wrong size to type that they ordered. They have stolen all our profits on the sale and do not even pay the spiffs they do if we sell them.

This is just a continuation of their greed. Now they are cutting out their distributors so they can take their profit also. 

All of the upper management of goodyear are ex PepsiCo or Hewlett-Packard and are only concerned about getting their 10% per year increase for the stock holders. They even have the nerve to ask us to warranty Walmart tires as walmart will not warranty a tire unless customer buys roadhazard.

As for purchase price Goodyear sets that on thei web site with what they call MAP pricing. If we sell for higher than MAP, we look like crooks gouging the customer. So we have to sell for MAP which is about an 8% profit.

I have been in the tire business for almost 35 years and as I have told Goodyear several times we have been a Tire shop selling full service and wil some day become a full service shop selling a few tires.

12 hours ago, Truett said:

I don’t see their current move with TireHub as causing any problems for me. As for distribution they only are looking at the large city’s like Chicago, New York , LA, Indy and such. They are using the old wharehousing systems they still have in place. Smaller markets will still be supplied by regional distributers.

ATD is one of the largest distributors in these large cities and therefore were in direct completion with TireHub.

This is just a continuation of what Goodyear started 3 years ago when they moved to sell Tires online, ship them to us, and have us install them. We only get aa minimal delivery fee (about $5) and have to install at the price Goodyear sets. We have to buy the tires, do the work and we get a credit back from Goodyear. Any problems the customer has they have to back to goodyear as they have charged their credit card. But the ustomer blames us for wrong size to type that they ordered. They have stolen all our profits on the sale and do not even pay the spiffs they do if we sell them.

This is just a continuation of their greed. Now they are cutting out their distributors so they can take their profit also. 

All of the upper management of goodyear are ex PepsiCo or Hewlett-Packard and are only concerned about getting their 10% per year increase for the stock holders. They even have the nerve to ask us to warranty Walmart tires as walmart will not warranty a tire unless customer buys roadhazard.

As for purchase price Goodyear sets that on thei web site with what they call MAP pricing. If we sell for higher than MAP, we look like crooks gouging the customer. So we have to sell for MAP which is about an 8% profit.

I have been in the tire business for almost 35 years and as I have told Goodyear several times we have been a Tire shop selling full service and wil some day become a full service shop selling a few tires.

Based on the information I have been gathering it sounds like this might be more than Goodyear's greed. Some of the financial rumblings I have read and heard point to ATD being on the brink of bankruptcy and both Bridgestone and Michelin are also considering no longer supplying them with products. Of course Michelin and TBC have now merged to create a new wholesale supplier and Tirehub being a joint venture with Bridgestone makes it sound like there is some possible truth to that. I guess we will have to wait and see how ATD's future unfolds.

10 hours ago, jhamrick said:

Based on the information I have been gathering it sounds like this might be more than Goodyear's greed. Some of the financial rumblings I have read and heard point to ATD being on the brink of bankruptcy and both Bridgestone and Michelin are also considering no longer supplying them with products. Of course Michelin and TBC have now merged to create a new wholesale supplier and Tirehub being a joint venture with Bridgestone makes it sound like there is some possible truth to that. I guess we will have to wait and see how ATD's future unfolds.

That may well be true, time will tell. Here is a link to the open letter from ATD’s president in Tire review stating they are financially sound.

http://www.tirereview.com/atd-issues-open-letter-to-stakeholders/

Yes just had customer ask if I could get ttires for his car,  he showed me a Sams club flyer with $80 tires, buy 4 get $80 off with free mount/ balance. I looked up the tires, I can get them for $80 but not do buy 4 get $80 off and I can't mount/ balance free. My price is $150 more than Sams, just lost another customer.

No Rick, you did not lose a customer (unless you are a tire store only). You lost a money losing job to a big box, but that big box cannot do the other jobs you can. Concentrate on filling your bays with what you can make money on, not with what you wish you could make money on. 

Sounds oversimplified, I know, but I have many regulars who buy tires at the big places and do the rest of their service with us and I am fine with that. When I do sell tires they are at a profit because I am the convenient shop for tires, not the cheap one.