Get Started With Tire Sales
SHOP STATS: American Import Auto Location: Venice, Fla. Owner: Jeff and Donna Hazeltine Staff Size: 9 Shop Size: 8,625 square feet Number of Lifts/Bays: 9 Average Monthly Car Count: 40 ARO: $927 Annual Revenue: $1.4 million
For more than 30 years, Jeff and Donna Hazeltine have owned and operated American Import Auto in Venice, Fla.
For nearly that entire time, the shop never sold a single tire. Customers would come in and often need tires replaced, and because the Hazeltines wanted to take care of them, they'd do the legwork themselves. They’d bring the vehicle to a nearby tire shop to get repairs and a new set of tires, but the shop itself never actually sold a tire.
Over the last year, Donna began to wonder, “why are we doing this?”
“It took a ton of time, people and manpower to bring vehicles back and forth,” she says. “After all these years, why aren’t we just selling them ourselves?”
So they did. American Import Auto has been selling and repairing tires, along with the rest of their general repair services since October 2020 and it’s been “smooth sailing,” Hazeltine says. They wanted increased convenience but didn’t expect immediate major profit or significant demand, yet the service has taken off. They sell roughly 40 tires a month.
“We didn’t expect to do many tires at all, and we aren’t a tire store, so in comparison to that we sell a lot of tires. That was revenue that we’ve let go out the door,” she says. “It’s like ‘why didn’t we do this before?”
Tom Watson, owner of Tom’s Bulldog Automotive in Coos Bay, Ore., took it a step further. With no previous tire experience, Watson jumped on board and became a Tire Pros franchisee. Suddenly, the shop went from having no tire experience to operating an extra wing of the business solely dedicated to tire sales.
The transition has been part of Watson’s plan to diversify the shop’s offerings in order to become an ever-elusive “one-stop shop,” and ensure the business can still be relevant as EVs gain prominence.
“Electric vehicles are relatively disruptive to automotive as we know it,” he says. “We see the world economy is moving towards carbon neutrality. We wanted some diversification of income.”
Now Watson’s shop can truly address all vehicles' needs other than collision work. It’s been even more beneficial for the small amount of fleet work that Watson does, allowing those companies to save time, and thus money, to get all the repairs and services done at the same time.
So what factors should be considered when jumping into tire sales? And how can it be integrated into the selling process? Ratchet+Wrench spoke with Hazeltine and Watson to find out.
A simple service add-on.
For Watson, adding tire sales to the shop’s selling process was easy. He was already using AutoVitals for vehicle inspections and workflow. In the inspection, his team would determine the state of each vehicle’s tires and refer customers to local tire stores for service. Now, instead of referring them, they pitch them on buying directly from the shop.
The service was initially approached like other repairs; framed as an element needed to keep the vehicle in top shape and his shop can do it exactly how it needs to be done … until Watson realized a mindset shift was in order.
When he initially got into tire sales, he expected to pull the same gross profit margins he was seeing with his repair work. That was not the case. His gross profit percentage is around 35 percent for tire sales, while it’s closer to 60 percent for the repair work.
Shop owners are left with a key decision when it comes to tire pricing. Will you mark up your tires to boost your margins or take the smaller profit percentage in stride?
But, as a part of the Tire Pros franchise, Watson must stick with the prices he’s given.
In contrast, the Hazeltine’s do mark up the tire prices slightly, while still trying to remain competitive in the area. In July of 2021, their profit margin on sales was 19.6 percent.
“Is the margin huge? No,” Hazeltine says. “But we markup them up because it’s a convenience for the customer to be able to do tires in-house.”
Like any shop service, the equipment needed to properly repair and sell tires is an investment.
Luckily the list of equipment needed isn’t long. The Hazeltines bought an alignment rack, a tire balancer and weight kit. That’s all they need.
Watson bought the same, plus a tire machine, a tire repair stand, and tire repair tools. As a franchisee, he was able to use some national dealer discounts to save roughly $15,000 on equipment. He estimates the alignment rack cost around $65,000, and the mounting and balancing machine came in around $35,000.
That initial investment could make some balk, but both Watson and Hazeltine emphasized that it has been worth it with the amount of business they’ve brought in.
Storage was also a factor that both saw as a potential problem, but it hasn’t been an issue for either. Hazeltine has made use of the building she owns behind her shop, and Watson expanded and bought the entire building, using the extra space as its Tire Pros facility.
Even though both have these extra spaces, they don’t think it’s necessary for every shop. Both Hazeltine and Watson don’t have a large inventory of tires that they store. When a customer needs a tire, both shops can have it ordered, delivered and assembled by the next day. In major cities, Watson estimated the process could be completed in the span of a day.
The real requirement that both needed to grapple with was training.
Two different paths.
Hazeltine addressed training through hiring. Around the same time that the shop expanded into tire sales, Hazeltine hired a shop manager and service advisor from a nearby Tire Kingdom. The duo were quickly able to get the team up to speed and take on the burden of the new work.
“It’s a good situation if you can get it,” Hazeltine said. “It worked out for us.”
Watson didn’t have that luxury. Instead his entire team went through training for the first time. Unlike some other Tire Pros, the franchise was designed for shops that were already doing tires or were solely a tire shop, he said. Because of that, Tire Pros didn’t have a great structure for training.
That resulted in a much larger learning curve for the staff. The training wasn’t needed as much on selling the tires and all the features of tires as it was for how to properly repair them, how to mount and dismount, etc. It also included big decisions like if they were going to sell used tires or if they were going to put on tires that people bought from a third-party. Ultimately, the shop was able to answer those questions and have become a successful business. If Watson could do it again, he’d hope to have someone on staff who had some experience with tires.
“We did what most people don’t do. We went cold turkey and just started a tire shop,” he said.