Freebies can end up being costly for dealerships. Mastria Nissan, of Raynham, Mass., has found a way to give away a costly service without hurting its bottom line.
In 2005, Mastria, as a recently established store, launched a Tires for Life program to gain an edge. The service, which covers up to $175 per tire on cars purchased and serviced only at the dealership, has helped the store maintain one of the highest service retention rates in the area, said Service Manager Steve Ferreira.
"It almost seems like a gimmick in the beginning," said Ferreira. "But it's been very positive."
Nearly a decade ago, programs like Mastria's started catching on as a policy to sell to new-car customers. However, after one of the major policy vendors, Millennium Protection Group Inc., in Dallas, went bankrupt in 2009, dealers were left holding the bag to fund tens of thousands of dollars in policy claims. Many have shied away from the concept since.
Ferreira said Mastria pays for its tire program on its own, avoiding a potentially costly reliance on a vendor. The dealership began by setting aside $50 out of every vehicle sale, creating a fund to cover tire replacement costs.
The dedicated fund avoids any potential losses from the program, but Mastria typically breaks even on the service.
"We've done millions of dollars of tire claims, but it's nothing we make money on," Ferreira said.