Storing customers' winter tires pays off for dealers

Dealerships in places with wintry climates that store tires for their customers during the off-season must maintain investments in space, time and attention. The service usually isn't a profit source.

But tire storage pays off in service visits, sales opportunities and enhanced customer loyalty, dealers and industry experts say.

"The guys who really embrace this are the guys who understand retention," said Jim Phillips, the director of education, OEM and allied industry, at the National Automobile Dealers Association's Dealer Academy. NADA does not keep data on the number of franchised dealerships that store customer tires, he said.

"The physical act of storing tires is not extremely lucrative," Phillips said. "But the idea is lucrative because customers come back."

Customers who store winter tires at a dealership visit in late fall to get them put on and in early spring to have them taken off. Owners of premium-brand vehicles are more likely to store their tires.

Many dealerships don't charge for tire storage but often more than make up for the cost by capturing additional service business. For example, dealerships may charge for tire installation.

Mary Pacifico-Valley, dealer principal of the Denver-based Rickenbaugh Automotive Group, said the group's Infiniti dealership in Dacono, Colo., offers free storage for new-vehicle customers who buy tires there. Keith Smerchek, the dealership's fixed operations director, said the store charges a $60 fee for tire mounting and installation.

"The whole point is to get customers loyal, to encourage retention and loyalty," Pacifico-Valley said. "If you try and make it a profit center, you've defeated the whole purpose."

"And of course, you do see them twice a year," she said. "At that time you do the multipoint inspections, all the things you do whenever anybody comes in."

Derrick Albrecht, the service and parts director of Lexus of Bellevue in suburban Seattle, said his dealership also offers free winter-tire storage for customers who buy the tires there. Customers pay $25 per tire for mounting and installation.

"It's a service we've been providing for coming up on 15 years," Albrecht said. "It's a natural way to sell more tires."

Albrecht said the dealership program addresses customers' concerns about where to store their winter tires. "It also gives us a great [opportunity] to remind customers in November and April to come and visit us," he said.

The dealership's sales of winter tires vary with the weather, Albrecht said.

"Some years when there's snow, we've sold 400 winter tires," he said. "Some years it's 80. In the Pacific Northwest, we don't have hard winters, but we do get a lot of rain, and the winter tires just work better all around."

Patrick Nove, Lexus of Bellevue's parts manager, estimated that the dealership generally stores around 300 sets of tires. That's a relatively small number, he said, considering that the dealership sells more than 1,200 new vehicles a year, but added that available space imposes limits on tire storage.

That's a common problem. At some point, Pacifico-Valley said, her Infiniti dealership "will need offsite storage, and I will do that when we reach that point. [Tires] just take up so much room."

Some businesses store tires for dealerships. Mike Caplinger, CEO of Denver-based Seasonal Tire Storage Inc., said he works with a dealership that stores as many as 450 sets of tires, either at its location or with his company. He did not identify the dealership.

Nearly 250 tire dealers, auto dealerships and auto repair shops refer customers to Seasonal Tire Storage. New-vehicle dealerships account for about one-third of that total, Caplinger said. In addition to its operations in the Denver area, the company also does business in Oregon.

"Among the dealerships we work with are Audi, Porsche, Mercedes-Benz, Land Rover, BMW and Lexus" stores, Caplinger said. "It's primarily the premium dealers."

Caplinger estimated that about 30 percent of luxury-brand dealerships in the Denver area store tires for customers in the off season. Volume-brand dealerships rarely offer storage, he added.

But Caplinger said space constraints have forced him to stop soliciting new tire-storage business among franchised dealerships.