Fixed Ops Journal - August 2017 - 14

FIXED OPS JOURNAL

A Dealer Tire wall drawing depicts a century of Cleveland and company history.

TIRES

continued from Page 12

upscale employee cafeteria and a high-tech
gym with an indoor track.
The company gives its dealer clients the
same sort of personal attention. And Dealer
Tire's efforts to help dealers capture market
share from tire stores, which dominate the replacement tire market, are paying off.
Last year, sales of 236 million replacement
tires yielded $29.7 billion in revenue, Modern
Tire Dealer reports. New-vehicle dealerships'
share of the U.S. market grew to 8.5 percent in
2016 from 1 percent in 2000.
Higher tire sales are key to increasing fixed
ops profits and boosting service customer retention, says Jim Lang, an analyst who tracks
the auto parts industry.
"The Mueller boys have a good point," Lang
says. "Tires are not a loss leader. They are a relationship builder with the car owner."
The auto industry is coming off seven
straight years of annual increases in new-vehicle sales. Although that streak likely will end
this year, the demand for replacement tires
should be strong in coming years even if the
economy cools, Lang adds.
That represents a big opportunity for franchised dealers. If they capture 20 percent of
the replacement market by 2032 - short of
the Muellers' projection of 25 percent - they
would still sell 47 million tires annually. That
total would more than double the 20 million
they sold last year.

'Off your butt'
The Muellers' retail roots inform Dealer
Tire's selling strategy for dealers. That plan

PAGE 14

AUGUST 2017

Dealer Tire dossier

Facts about the nation's largest
distributor of replacement tires to
franchised new-vehicle dealerships:
Headquarters: Cleveland
Employees: 1,250
Annual revenue: more than $1 billion
U.S. distribution centers: 39
Customers: 10,000 dealerships
representing 24 automakers
Other markets: China
Source: Dealer Tire

calls on service advisers to inspect a vehicle's
tires on the service drive, in the customer's
presence.
"You need to get up off your butt and walk
out to the car, hopefully with the customer,"
Dean Mueller says. "And you need to bend
over to inspect the tires.
"Amazingly enough, that is still not necessarily common practice. Some dealers are
pretty good at it. Some aren't."
The point of the walkaround, he says, is to
"plant the seed in the customer's mind that if
you need tires, call us. We're competitive.
We're experts. We have the tires. And we can
get them put on in a competitive way."
Dealerships have a major advantage over
competing tire sellers, if they choose to exploit
it: They need only sell tires that are identical,
or have equal speed and load ratings, to the
original equipment tire fitted to the car or
truck at the factory.
That greatly reduces the inventory dealerships must carry. Dealer Tire, which has 39
warehouses across the country, can deliver

FRANCIS E. MILLER

tires to a dealership several times a day in many of its markets, which also allows the store
to keep its inventory lean.

Retention tool
Scott Mueller says dealerships should tailor
replacement tire options to the way a customer drives and how he or she uses the vehicle.
With such an approach, he says, "most people
- literally 85 percent of the people - will get
the tires."
Margins on tires are usually far lower than
on other common wear and repair items, such
as oil filters, alternators and water pumps. But
that's not the whole picture, Dean Mueller
says.
"People who buy tires at a dealership will
buy 2.5 times more service over the life of the
vehicle," he says. "They'll visit dealers three
times as much.
"Tires are the first defection point," he adds.
"If you ignore them, customers go down the
street to a Firestone or a Belle Tire. And they
are not coming back."
Scott Mueller says that tire sales are extremely profitable if they occur in volume.
"What you are selling at a service business is
time and space," he says. "How much profit
you can make per bay hour? That is a magic
formula."

Online sales channel
In addition to the information and training
it provides dealers, Dealer Tire produces marketing materials for tire brands and individual
dealerships.
The company also operates RightTurn.com,
see TIRES, Page 16


http://www.RightTurn.com

Table of Contents for the Digital Edition of Fixed Ops Journal - August 2017

Fixed Ops Journal - August 2017
Contents
Need a lift
Tire track
Mobility devices
Times to recall
Slick trick
Fatal fire
Players club
Online parts
Lean inventory
Loyalty test
Patent pending
Open minded
Editor’s Letter
Service Counter
Legal Lane
Richard Truett
Feedback
Five Minutes With
Letters
Fixed in Time
Fixed Ops Journal - August 2017 - Intro
Fixed Ops Journal - August 2017 - Fixed Ops Journal - August 2017
Fixed Ops Journal - August 2017 - Cover2
Fixed Ops Journal - August 2017 - Contents
Fixed Ops Journal - August 2017 - Editor’s Letter
Fixed Ops Journal - August 2017 - 5
Fixed Ops Journal - August 2017 - Service Counter
Fixed Ops Journal - August 2017 - 7
Fixed Ops Journal - August 2017 - Legal Lane
Fixed Ops Journal - August 2017 - 9
Fixed Ops Journal - August 2017 - 10
Fixed Ops Journal - August 2017 - Need a lift
Fixed Ops Journal - August 2017 - Tire track
Fixed Ops Journal - August 2017 - 13
Fixed Ops Journal - August 2017 - 14
Fixed Ops Journal - August 2017 - 15
Fixed Ops Journal - August 2017 - 16
Fixed Ops Journal - August 2017 - 17
Fixed Ops Journal - August 2017 - Mobility devices
Fixed Ops Journal - August 2017 - 19
Fixed Ops Journal - August 2017 - 20
Fixed Ops Journal - August 2017 - 21
Fixed Ops Journal - August 2017 - 22
Fixed Ops Journal - August 2017 - 23
Fixed Ops Journal - August 2017 - Times to recall
Fixed Ops Journal - August 2017 - 25
Fixed Ops Journal - August 2017 - 26
Fixed Ops Journal - August 2017 - 27
Fixed Ops Journal - August 2017 - Slick trick
Fixed Ops Journal - August 2017 - 29
Fixed Ops Journal - August 2017 - Fatal fire
Fixed Ops Journal - August 2017 - Richard Truett
Fixed Ops Journal - August 2017 - Players club
Fixed Ops Journal - August 2017 - 33
Fixed Ops Journal - August 2017 - Online parts
Fixed Ops Journal - August 2017 - 35
Fixed Ops Journal - August 2017 - Lean inventory
Fixed Ops Journal - August 2017 - 37
Fixed Ops Journal - August 2017 - Loyalty test
Fixed Ops Journal - August 2017 - 39
Fixed Ops Journal - August 2017 - Patent pending
Fixed Ops Journal - August 2017 - 41
Fixed Ops Journal - August 2017 - Feedback
Fixed Ops Journal - August 2017 - Open minded
Fixed Ops Journal - August 2017 - Five Minutes With
Fixed Ops Journal - August 2017 - Letters
Fixed Ops Journal - August 2017 - Fixed in Time
Fixed Ops Journal - August 2017 - Cover3
Fixed Ops Journal - August 2017 - Cover4
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