Tire Replacement – Customer Retention and Revenue

“90% of dealership service customers that buy tires elsewhere never return to the dealership for service.”

 Americans are keeping their cars longer than ever before, often for 10+ years. Tires typically must be replaced after six years (or more often, depending on road hazards and other driving conditions). In fact, tire replacement represents a $38 billion revenue stream, which is expected to grow even larger. Additionally, according to J.D. Power, vehicle owners are likely to purchase the same tire brand that was originally installed on their new vehicle.  This presents new vehicle dealerships the opportunity to significantly increase services department revenues through tire-related business.

According to Scott Mueller, CEO of Dealer Tire (a distributor of tires to new vehicle dealerships) “Vehicles that were sold in the last five years are going to need tires in the next 2-3 years, which means that there is a real upside that has not been reached.”

Dealership retail tire marketing share is currently 8.5%, up from only 1% in 2000. While this is significant, there is a lot of room for growth, which should make it the focus of dealerships’ sales efforts.

The challenge is that consumers typically do not think of their dealerships when they need unplanned repairs, such as tire maintenance or replacement. In fact, 77% of routine service maintenance is performed outside of new car dealerships. New car dealerships must compete with these aftermarket competitors, who aggressively promote convenience and low price.

New dealerships have an advantage because of their established relationship with customers, and because their technicians tend to be better trained and knowledgeable about the vehicles they sell. However, dealerships must employ smart marketing strategies to realize their full revenue potential.

Drive-Sure gets consumers to think of their new car dealerships first.  Their plans provide Road Hazard Tire Protection benefits, including complimentary tire repairs, as well as monetary incentives for unplanned tire purchases at the dealership.  This drives more customers back for purchases and keeps the dealership top-of-mind, not only for tires, but for all planned and unplanned services.

The best way to retain your customers is to give them a reason to come back!

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