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Stocking Tires?


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Was wondering if it is worth to stock tires? Seems like with all the sizes would be a tremendous outlay of money but sometimes the big box stores like Pep Boys, Mavis, STS etc.. are hard to compete with because they stock the tires and sometimes it could take me hours to get the tires from the supplier.

 

Thoughts?

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Most clients of ours drop off there vehicles for services like tires. In that case, no big deal. We have only debated on carrying the top 3 selling for quickies on fleet but haven't yet done that because we don't think it's necessary yet.

 

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It depends on how much of your customer base emphasizes speed of service and also how far your suppliers are. If you have a shop with a high car count and people are tapping their watches waiting for their cars then stocking tires may be something you want to look into. You have to make sure you can turn over the tires in a relatively quick amount of time.

 

Like totalautocare, my shop has a low car count and most of my clients drop their cars off (or we force them too in a nice way). We also have tire suppliers in close proximity.

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  • 2 weeks later...

I Stock two particular sizes new, because I am also a very large used tire distributor, these tires are no where to be found used, so people often opt into buying them new if I have them readily available. Other than that my cash reserve is invested in 500(quality) used tires.

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We stock no tires what so ever. To me that is just capital lying around. I can get any Tire the customer chooses in a day. I do not mark up the tire at all. So on a 4 tire sell we make $80 on mounting and balance. I can do a set of 4 by myself in 30 minutes. That being said that is way more money per hour than our shop rate. I will gladly install tires all day long than wrenching. We don't offer any road hazard, special fees and I have a guy that takes all my discarded tires for free. Win, win.

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It looks like I am the odd ball here. In my shop stocking tires is an absolute necessity. I stock roughly 2,000 units and it works very well for me. Tires can be quite lucrative if you can do them in volume and having the ability to stock them allows you to take advantage of good buying opportunities when they come along. The goal in warehousing tires is to make as much money as possible when you buy them to keep investment costs to a minimum. For example, I am currently averaging $23.57 cash back on every Michelin and BFGoodrich I purchase. $13.83 on every Toyo, $11.03 on each Yokohama, and $14.05 on every Continental and General. That is cash back from the manufacturer and the supplier combined, some of which is paid to me monthly and some of which is paid quarterly. The dollar figures are smaller for other brands such as Cooper, Mastercraft, Pirelli, Hankook, Kumho, Nitto, and Sumitomo, but I earn cash back every time I purchase one of them as well.

 

Whether or not stocking tires can and will work for you will take some time to figure out and there are many variables that come into play. If you feel that you are only able to sell a few sets a week then it is almost certainly not beneficial to stock any, but if you believe you have the potential demand to move three or four sets a day then it is definitely worth taking a good long look into growing that area of your business. Some questions you will have to ask yourself.

 

How much demand are you experiencing from your customers?

Do you have the required space to warehouse them?

Do you have enough cash to invest in them?

Do you participate in any manufacturer incentive programs?

Do you have a good working relationship with a large supplier?

Do you have the right equipment to begin doing more?

 

If you have the demand, space, and cash then you should almost certainly investigate further. If you can develop a good working relationship with a supplier like Carroll, TCI, or ATD and move enough units to participate in a manufacturer program such as Michelin MAST, Continental Gold, Yokohama Advantage, or Toyo Driven you can get a better buying price and earn money when you buy them. One potential drawback that comes with doing more volume in the tire business is the associated equipment and supplies....more capable tire changers and wheel balancers, TPMS diagnostic/reprogramming devices and sensors, wheel weights, etc.

 

On the positive side, the more I stock the more I sell. I have found that the more options I give customers the more likely I am to have something on the shelf that appeals to them on some level. This is simple consumer psychology. Many consumers make impulse buys and most consumers love to have options and the "perceived" value of a rebate or sale available to them. If a customer walks into a shop and asks for price and availability on a set of P215/55R17 you are much more likely to make a sale if you can provide estimates on three or more products, which provides the consumer with choices. One of those choices is eligible for a manufacturer rebate or is on sale, which provides perceived value. And you can have any one of them installed in about 45-90 minutes, which provides the opportunity to buy on impulse.

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We stock upwards of 2000 tires as well even though we get twice a day delivery from ATD. I think that's why we sell quite a few more tires than other shops I' m familiar with. There are just a lot of people that come in without an appointment and want tires NOW. Plus, we sell quite a few tires to the local car dealers and they need them NOW.

As far as Frostytire's comments about completing a 4 tire installation in 30 minutes by himself, well maybe. If the tires are not low profile, are mounted on steel wheels and the TPMS is auto reset. But install 4 30/35/40/45 series tires on aluminum wheels, cleaning the corrosion from the bead area, cleaning all the old tape weight adhesive off the back of the wheel [because all the other tire stores never did], cleaning the corrosion from the wheel and hub mating surfaces, and possibly having to reset the TPMS and I challenge him to do it by himself in 1 hour.

By the way, yes we do mark our tires up using a matrix just like parts. A different matrix but a matrix non the less. And we average about $150 a set. That's using the invoice cost and doesn't take into account program dollars.That includes everything we do at that time plus all future tire services including rotations, re-balancing, flat repairs and pro rated RH. A free alignment check is included as well. About 30% of the checks do not need an alignment.

Edited by tyrguy
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Remember, the retail prices derived from this matrix include everything. We do run monthly sales off these prices ranging from $40 to $60 off per set. We seem to be fairly competitive with this matrix. In fact, even pricing against Tire Rack and such once you add their shipping and our mounting and balancing often times we are withing the sales tax difference. And if congress would ever get the internet sales tax thing figured out that Tire Rack advantage would disappear.

 

cost 0-50 39% [divide by 61]

cost 50-75 36%

cost 75-100 33%

cost 100-125 29%

cost 125-150 28%

cost 150-175 26%

cost 175-200 25%

cost 200-225 23%

cost 225-250 22%

cost 250-275 21%

cost 275-300 20%

Edited by tyrguy
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We stock about 400 tires and get deliveries twice a day. That's 100 sizes in stock ready to go. If you stock less than say 30 sizes it's probably a waste of space and money because chances are you wont have what the customer needs. Turn rate goal is 6x/yr or I swap in something different.

 

That said, I don't stock things like brake pads and spark plugs. The parts stores deliver in 20 minutes so I save my money.

 

We used to make $150-$200 on a set of hoops, now I'm happy to make $80-$100. Too much competition. I'll put on a set for $60 if I have to to keep that person from going down the road to a competitor (on something easy like steel wheels)

 

Carry out to local shops I don't make anything except the program dollars.

Edited by alfredauto
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  • 2 weeks later...

 

Let me guess the sizes you stock: 235/75/15 and 205/70/15???????

 

 

Acctually I have a nice little surplus of those! I use LKQ often, and my rep knows im a tire shop so he always lets me get those before someone else does. They are very popular! Along with 225/50/16 for the grand ams!

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We stock about 400 tires and get deliveries twice a day. That's 100 sizes in stock ready to go. If you stock less than say 30 sizes it's probably a waste of space and money because chances are you wont have what the customer needs. Turn rate goal is 6x/yr or I swap in something different.

 

That said, I don't stock things like brake pads and spark plugs. The parts stores deliver in 20 minutes so I save my money.

 

We used to make $150-$200 on a set of hoops, now I'm happy to make $80-$100. Too much competition. I'll put on a set for $60 if I have to to keep that person from going down the road to a competitor (on something easy like steel wheels)

 

Carry out to local shops I don't make anything except the program dollars.

What program are you set up with?

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
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