When Sunland Lincoln-Mercury in Glendale, Ariz., decided to enroll in Ford Motor Co.'s program to help dealers sell more tires, Parts Manager Tip Combs kept it simple.
He cleared a 40-foot bin to store his tire inventory. He charges customers cost plus a 20 percent markup and $10 to mount and balance each tire. He displays his tires on outdoor racks and features tires in the dealership's advertising.
Combs said the results have been amazing. Five months ago, he sold virtually no tires. Now, he sells three or four sets a day. More important, Combs says he is selling about three times as many wheel-related parts and batteries than before the program.
The program is Around the Wheel, a Ford Customer Service Division initiative to help dealers sell more tires and related repairs such as brakes, shocks and wheel alignment - business that often goes to aftermarket service providers. The goals of the program are to increase service department revenues, enhance a dealership's image as a one-stop service provider and build customer loyalty.
D/C TESTS TIRES, TOO
Combs says he does not make a lot of money on tires, but that is OK.
'Forget the tires. I don't think Ford ever intended that dealers get rich selling tires,' said Combs, who has been a Ford parts manager for 30 years.
Dealers sell a variety of aftermarket products, but most do not sell tires. Those who do not say tires take up too much space and yield little or no profit because of fierce competition from tire discounters.
Ford Customer Service held about 60 meetings around the country last summer to tell its dealers about Around the Wheel.
DaimlerChrysler will start a test program in Orlando, Fla., this month to sell tires in dealerships.
'Our business case is that we want dealers to increase their retail business,' said Scott Eldridge, repair marketing manager in charge of Ford's Around the Wheel.
Said DaimlerChrysler spokeswoman Melinda Wilson: 'It's all about customer satisfaction. We don't want them ping-ponged around.'
General Motors and American Honda Motor Co. do not have programs for dealership tire sales.
Ford began setting up the Around the Wheel program last fall by helping dealers with tire ordering, pricing, warranties and product knowledge, Eldridge said.
Ford's program requires a substantial financial commitment from dealers. So Ford is aiming Around the Wheel at its 3,000 large dealerships and 500 to 600 of its 2,000 smaller dealerships, Eldridge said.
Those who participate must have three key pieces of equipment: a front-end alignment machine, a wheel-balancing machine and a tire-changing machine.
Eldridge said the alignment machine typically costs $25,000 to $40,000; a wheel balancer, $5,000 to $7,000; and a tire changer, $3,000.
'You need a lot of traffic to make this investment pay off,' he said.
BEEN THERE, DONE THAT
Some dealers and parts managers have tried to sell tires and decided it was not worth the hassle.
Duane Kip, parts manager at Southside Dodge in Orlando, has heard about the DaimlerChrysler program. He said he used to stock tires but stopped because no matter how slight his markup, his customers always would find similar tires somewhere else for less.
'If you mark it up $5, the customer will see it somewhere else for less,' Kip said. 'I've been burned several times.'
Mike Lowe, owner of Jasper Jeep-Dodge-Chrysler-Plymouth in Jasper, Ga., said he sold Goodyear tires at his dealership for seven years in the 1980s and kept a $500,000 inventory of tires.
Lowe said it was difficult to stock the many tire sizes, and Georgia law mandated that old tires, which presented a fire hazard, be sold to a recycler. At a retail price of $100 each, tires yielded next to no money, he said.
'Tires are extremely competitive; it's not worth the trouble,' said Lowe, who is chairman to the Chrysler-Plymouth-Jeep National Dealer Council. Lowe got out of the tire business in 1989.