In today’s economic environment, each month brings significant challenges to independent tire dealers. However, the holiday and post-holiday seasons remain two of the toughest periods of the year in terms of retail tire sales and automotive service revenue.
Whether you blame mild weather, holiday spending or general customer apathy, the effects are the same: December through February can be a tough period for dealers to weather.
In this feature, five veteran dealers share proven strategies for getting through those dark months while positioning your business for a return to prosperity after the winter thaw. Here’s what they recommend:
1. Launch a corporate discount program. December through February is a great time to promote your dealership and its menu of services to fellow businesspeople in your community via employee discount programs, says Paul Weaver, president of Princeton, Ind.-based Southern Indiana Tire, which has four retail stores.
Weaver says Southern Indiana Tire’s discount program is extremely effective. “We have people go out and talk to businesses (such as) lawyers’ offices, big doctors’ offices, companies that may have 20 or more people working there.”
The dealership hands out “preferred customer cards” that can be punched four times in order to receive a free, fifth oil change. (Southern Indiana Tire typically charges $24 for an oil change.)
“Maybe we’ll also offer a discount on new tires. When we go into a new city we do a lot of that, just to let people know we’re there. They really like the oil change card.”
[PAGEBREAK]Southern Indiana Tire also sends out service reminder cards, “three months after the customer has had his or her oil changed. You would be amazed at how many people bring them in.”
Weaver also plans to carefully monitor how his company’s ad dollars are allocated. Newspaper advertising is on the wane, he explains, while direct mail remains a winner. With direct mail, “we can cover ZIP codes. We can be location-specific. We’re also looking at how we can use the Internet to reach our customers. I think that’s the key to the future.”
If recent performance is any indication, the next few months should be good for Southern Indiana’s passenger and light truck tire sales, according to Weaver.
“I think units will be good because customers have put off (new tire purchases) for so long. If we have an early snow, I think December will be really good.”
2. Promote vehicle maintenance. When business slows down, it’s tempting to rein in your advertising and marketing budgets. Lakewood Firestone, a single-location retail dealership on the west side of Cleveland, Ohio, is taking the opposite approach. “We don’t cut back,” says co-owner Rich Birsic.
Birsic and his father and business partner, George Birsic, use the winter months to send out direct mail pieces to existing and prospective customers.
“We do coupons, we have (advertisements) in a broad mass mailer — one of those dollar-saving magazines.”
They also send out postcards and thank you notes to people who have shopped them before. Service reminders are effective, as well, Rich explains. “We promote maintenance, along with safety. That’s why we’re here.”
The dealership advertises brake checks, radiator flushes and other “winterization” services. (“We try to promote brakes twice a year.”)
Preventive maintenance resonates with Cleveland customers, who are accustomed to driving in harsh winter conditions, he says.
“Plus you’re always looking for something to replace other parts of the business you’re losing,” such as strut and shock work, which Birsic reports has “died off in general.”
Most of Lakewood Firestone’s customers are replacing struts and shocks at 80,000 to 90,000 miles vs. the traditional standard of 40,000 to 50,000 miles. “Cars are just being made better.”
The automotive service component of running a tire dealership never stops evolving, says Rich. And the winter months always bring unexpected challenges. “But we try not to get the blahs.”
[PAGEBREAK]3. “Rightsize” your inventory. Amityville (N.Y.) Firestone’s business has been good the last several winters, says owner Ernie Caramanico. But new tire sales are off to a slow start this season. (Auto service, he adds, remains up.)
“People are trying to get the most out of their tires. I saw two tires today with both belts showing.”
When tire sales are slow, it’s a good time to examine your internal operations, according to Caramanico. “We usually streamline our inventory during the winter” by weeding out slow-selling tires.
“We’ll do a physical inventory. If I have 20 of one size, I’ll cut it in half.” That doesn’t mean Caramanico won’t order more when demand picks back up. It’s just a way to keep cash flowing, he explains.
4. Get flexible on pricing. December and January are usually good months for Richlonn’s Tire & Service Center, which has five locations throughout the greater Milwaukee, Wis., area. “We don’t see a slowdown until February,” says Brett Matschke, the dealership’s president.
“When that comes, we try to be more flexible on our pricing. We’re more willing to match our competitors’ prices, specifically written estimates. We’ll also run some special deals to drive business.
“We’ll try to do some extra spiffs internally to get our salespeople fired up” about pushing certain tires, in addition to selling services like windshield wiper replacements.
5. Develop alternative revenue streams. “Instead of sitting there, crying and saying ‘There aren’t any tires to sell,’ we’re coming up with things” to increase vehicle service revenue, says Al Saks, president of Dorchester Tire Service Inc. in Boston, Mass.
“We’re concentrating on new areas. We’re soliciting fleets with vans and small trucks to get them on a program for lube and oil. We also have increased our capacity for bigger vehicle wheel alignments... so we can do ambulances, ramp trucks, that sort of thing.”
Dorchester Tire, which also sells commercial truck tires, has invested more than $100,000 in new equipment in 2009.
When it comes to specific winter “survival tips,” Saks recommends using down time to take care “of all those routine things we don’t take time to do,” like freshening your show room.
That said, there’s only so much you can do to dramatically elevate tire sales during the winter months, he believes. “Shopping doesn’t necessarily revolve around the vehicle this time of the year. People have set their budgets for other things.”
Not all tire dealers whom MTD interviewed expect to see a sales slump this winter.
“Traditionally, the fourth quarter is our strongest,” with the first quarter a close second, says Ken Papas, co-owner of Ashland Tire & Auto in Chicago, Ill. “I think in our market as a whole, it’s the mom-and-pop shops who are doing well. The mass merchandisers who live on advertising — they’re the ones who are struggling.”
“Our business is very good all the time,” says Robert Wood, store manager at Dean’s Tire & Automotive Service in Chesterton, Ind. “We treat our customers very, very well, and that goes a long way.” ■
