Tire Dealers Adapt to Economy and Customer Needs

Economic trends continue to impact tire dealers, including those who specialize in selling tires for CUVs and SUVs.

Ishmael Salandy, owner of Dominion Tires of Arlington, a single-store dealership in Arlington, Va., says “the economy and rising inflation (have) impacted SUV/CUV pricing a lot.

“The last two years, we have seen such an increase in prices across the board on all brands.”

Salandy, whose dealership only sells tires and provides tire-related services like alignments, felt compelled to adjust his labor rates in response.

“We used to charge about $40 per tire for installation,” which was in line with what his competitors charged.

“Then, I would say about five months ago or so, they lowered their costs to $25 per tire installation, so we had to do the same.”

This price jump on CUV and SUV tires — primarily at the premium level — has caused an increase in sales of tier-three and tier-four tires, says Salandy.

Seeing this trend, Salandy started stocking more-tier three and tier-four SUV/CUV tire brands and attributes Dominion Tires of Arlington's ability to stay afloat recently to the sale of those tires.

Tough times also have forced Salandy to look at alternative sources of supply.

During the last year, he teamed up with K&W Tire Co., a Lancaster, Pa.-based tire distributor, and started buying “about 95% of our inventory from them.

“We would buy all of their Cooper-brand tires — which isn’t a premium brand, but I would say is a more expensive tier-two tire. We bought about 45,000 Cooper tires from them last year and that’s primarily what we sold.”

Continued economic pressure forced Salandy to investigate other brands. His dealership recently picked up Sentury Tire USA’s Delinte line, which he says he can sell at an even more attractive price point.

“Right now, our inventory is about 75% tier-three and tier-four tires,” he notes.

Pricing challenges

Another dealership that felt the weight of tire pricing and inflation due to the pandemic is single-location, Kalispell, Mont.-based M&C Tire.

“We are now seeing prices start to level out, but for the past couple of years — especially pre- and post-COVID-19 times — there was a big fluctuation in pricing,” says Tara Postovit, the dealership’s owner.

“It’s challenging to price (tires) accurately if we’re paying more than the customer is spending.”

Postovit describes M&C Tire, which was founded in 1979, as being “old-school. We don’t charge up for the warranty afterward and the installation and all that comes with that.”

When the inflation and tire prices skyrocketed, customers would come into M&C Tire, saying they can get the same set of tires down the road for cheaper.

“Then we would have to explain to them that the price (other dealerships were) giving them is not the final price they would be paying,” she says.

M&C Tire faced a decision: to revamp their pricing model to withhold installation and warranty fees until the end of the process or to stick with their traditional method, which their customers prefer. The dealership chose the latter.

Postovit says managing inventory has also been a challenge.

“The tire industry is really interesting because you really have to pay attention to the (overall) economic market so you know what to stock. We will probably have to increase our inventory to more entry-level and lower-tier tires just to give people a chance to recover financially.”

She says M&C Tire uses a “good, better and best” model when suggesting tires to consumers. That will continue, but Postovit says the “good, better and best” now starts at the lower tiers.