Dealerships have options when it comes to building up their tire storage business
Seasonal tire changes already drive big service revenues for dealerships, but focusing on providing tire storage options for your customers can boost retention and provide a great service experience.
Many consumers don’t want to store their seasonal tires in their garages or basements and others live in condominiums that don’t allow them to do it.
Most dealerships now offer tire storage as a handy alternative and some charge a fee of about $120-$160 per season on average.
For dealerships that don’t have the space on site to store their customers tires, but still want to provide the service, they can partner with third-party companies that have warehouses specifically to house tires in climate-controlled conditions.
Some companies use specialized software systems to make sure the tires are properly catalogued to ensure the right tires are returned to the rightful owners.
Collectively, tire storage has expanded to create an industry that has many aspects to help consumers take care of one of the most important aspects of their vehicle ownership.
Brad Scherer is the Service Manager for Pickering Toyota, which stores some customers’ tires for a cost of $130 per season and sends the rest out to a nearby company that has a warehouse that does pickup and delivery.
“They’ll make a route just as if they are bringing milk,” said Scherer. “They pick up tires, they drop off other tires. Two days in advance we’ll order those tires back on their website. There’s a code they scan, so when I request it back they scan it and it’s delivered here. We confirm that drop off here and call our customers and let them know their tires are here.”
He said if dealerships don’t provide tire storage on site or use a third party, they are losing a significant source of revenue that can impact profitability. He said the dealership risks eventually losing the customer who will find another place to do it and potentially have other service work done there.
“This is why we are competitive with our oil changes and competitive with tires, we don’t want them going to a tire store,” said Scherer.
Leader Auto Resource (LAR), which is a company operating across Canada with over 3,200 new car dealers celebrated its 45th anniversary this year. The company has warehouse facilities in Calgary, Montreal and Newfoundland and offers tire storage to its dealers in close proximity with an approximate capacity of 50,000 tires.
“Tire storage is a source of revenue for dealerships, and most importantly provides strong retention with their customers ensuring they return twice a year,” said Allan Ezri, LAR National Director Supply Chain and Inventory.
“Some of our dealers need help because they have insufficient storage capacity and we’re here to help them either through LAR’s own facility and or through some our service partners.”
Tire Storage Solutions, which began in 2008, is one of the pioneering companies in North America that provides software solutions. CEO Domenic Ismaele said he began storing tires for companies such as Canadian Tire and dealerships across the Greater Toronto Area.
Ismaele implemented a manual system technology after he began the company, and then two years later built a proprietary system and integrated it with DMS as a monthly subscription.
“We found out the trucking and the warehouse part was very easy, but it was the technology that was most important,” said Ismaele. “We built the software that we sell today to handle and manage car dealerships with their own personal storage facilities. We handle third party technology for companies that want storage for dealerships and service centres, dealer groups that have their own warehouses and they want to store for their own dealers.”
He said the technology integrates with web-based warehouse management systems, DMS point of sale systems and has transportation logistics built into the system.
“When an appointment is made, our system integrates with it and sifts through it,” said Ismaele. “It looks for the seasonal tire storage appointments — people that are having tires swapped — and provides labelling systems and unique QR codes for those customer’s wheels and becomes like a FedEx package. Wherever that package moves, it has all the customer’s information on that QR code.”
So if it moves from a dealership to a truck, it gets scanned, the truck to the warehouse staging area and its final storage position. All that information is made available to the dealership — what time it’s being moved and when it’s going to arrive.
“When an appointment is being made at a dealership, that appointment goes to the warehouse immediately,” he said.
Ismaele said his company, which is headquartered in Mississauga, began dealing with U.S.-based customers about eight years ago. He said within the past five years, its U.S. business has eclipsed the Canadian business. It has American Tire Distributors (ATS), one of the largest tire distributors in the U.S., as one of its clients. Ismaele said he incorporated his company in the U.S. three years ago.
“They not only sell tires to dealers and service centres, they also store tires for them,” said Ismaele. “They use our technology to manage all of that.”
The Tire Hotel, headquartered in Woodbridge, began about 10 years ago and is an end user for dealerships and tire companies in the GTA. It has a 60,000 square foot warehouse in Woodbridge and has 21,000 sets of tires stored.
The company has designed its own in-house proprietary operating system, and each client has its own login to the web-based portal.
Each time tires are stored with the company, there is a full record of it and sections to add additional information for things such as brand of tires, make and model, tread depths and a section recommending changes for the following season.
“It’s all pretty simple and very user friendly to see and track,” said GM Adam Nesbitt.
He added the storage facility is climate controlled because if it’s too warm or too cold and left sitting for an extended period it can affect the tire. He said if tires are left longer than a year or more in the wrong climate, they begin to break down and you can see wear marks on them. Nesbitt also said the tires are stored vertically three feet high, which helps reduce tires from wearing down and putting additional stress on the rims.
The company also uses video surveillance inside and outside the building for security purposes.
