As the demand for tire storage continues to increase and car dealers are looking for ways to boost service and retention, it may be time to consider a third-party tire storage provider
As consumer demand for tire storage continues to increase, it’s leaving dealerships with a common problem — they’re running out of storage space.
It’s a problem with a simple solution — dealers can consider a third-party storage provider, according to Brad Meise, President of Tire Spa. The Ontario-based company offers tire storage services to dealers in the Greater Toronto area.
It’s a revenue stream
In an interview with Canadian auto dealer, Meise said using a storage provider means never having to say no to a customer. “If you have an in-house storage and you’re confined to 100 sets, for example, as soon as you’ve got those sets in storage you have nowhere else to put anything. But we can grow indefinitely to whatever the dealers’ needs are; we will go find another warehouse and continue to expand.”
Seasonal tires are often stored either in-house at the dealership, at a warehouse or through a third-party service provider. Using that last option can lead to a number of benefits: one of them being the ability to never turn down a customer, and another is the resulting revenue stream from two guaranteed service visits per year.
Tire Spa launched in 2009, growing from two dealers to around 60 and storing nearly 20,000 sets of tires — up from between 270-300 when they started off. When asked why the demand for tire storage has increased, Meise said one of the reasons involves insurance savings while another centres around tire manufacturers providing more information to consumers about their tires.
“The tire manufacturers in our area are active in talking to the consumer about the temperatures at which your tires work and don’t work,” said Meise. “Consumers (are also) being hit with the information at all angles — the dealer angle on the radio and television, and safety. There is more education going on.”
Dealing with a third-party tire storage service also provides dealerships with peace-of-mind, and it takes the hassle of dealing with the tires (and risking injury or damage) out of the equation.
Good providers are insured, have access to a climate-controlled warehouse or facility, and they have a policy in place in the event a tire is lost or damaged.
They should also be open to having dealers visit the facility in-person. “We gladly take them through the warehouse to show them how everything operates,” said Meise, adding that the company uses an electronic management system known as Tire Storage Solutions (TSS) that includes barcodes and scanners. It’s meant to simplify the entire process.
“There’s a lot of visibility on both sides for the dealer as well because we share in the same portal. There’s nothing hidden from them. They can see all their sets, their locations, where they are, the data, tire depth, make, model, size of the wheels, all that stuff.”
It’s a retention tool
A third-party tire storage provider can also serve as a great customer retention tool, according to Benoit Cloutier, Territory Manager, North Shore and Laurentians, Leader Auto Resources (LAR).
“When people arrive at the dealership, you may be there to look at their brake pads but there is a sales opportunity in terms of tires — one that wasn’t there before,” said Cloutier. “The interval between when the customer brings their vehicle in to the dealership to be serviced is longer and longer, and dealers are looking for a way to ensure their customers return.”
In 2018, more than 65 per cent of Canadian vehicles were equipped with winter tires — up from 22 per cent in 2013, according to an Investor Overview report by TSS.
LAR is a Quebec-based franchised car dealer buying group, serving more than 1,800 dealerships. Among many other services, they offer tire storage services to their members.
They use a temperature-controlled system in their facility to ensure the tires don’t dry out and that they are not left outside in a cold container. The tires are stored on the tread and are transported in cages for added protection.
Like Tire Spa, they also use the TSS software to make the whole process more efficient. “We use it internally and are connected with our members with this system,” said Cloutier. “If a dealer just wants the TSS system (as opposed to the tire storage service), he can use it.”
The TSS Solution
What is the TSS software? It’s a product launched by Tire Storage Solutions, a 10-year old company that provides software for car dealers, warehouses and third-party warehouses. It’s owned by Domenic Ismaele, who is also the CEO. He has about 30 years of experience in automotive fixed operations.
“Our software is specifically built and made for the automotive industry, so it’s not a warehouse software system or a tire inventorying system,” said Ismaele. “It’s actually a system that was specifically made for car dealers, for their service advisors and service staff to use, as well as anybody else, management and so forth.”
He said the software integrates with DMS systems like CDK Global, Quorum, Reynolds and Reynolds, Serti and more. Doing this allows the company’s ordering system to the warehouses to be seamless.
“When an appointment is generated at the dealership level, this appointment automatically gets transferred through to the warehouse without anybody having to call or physically make some sort of request for wheels,” said Ismaele. “Our system has visibility on a customer, their vehicle, when they’re coming in and the date and time of their appointment.”
It’s a process that allows the warehouses to deliver the tires at the specific time the dealer has requested them to arrive — and they typically want them delivered 24 hours ahead of their appointment with a customer.
Ismaele estimates the average cost of using a third-party storage provider to hover around $55-90 a season. That’s relatively cheap, if you consider the cost of the dealership manually managing/running a tire storage program. Labour costs would run quite high, and with the demand increasing every year those costs would only rise.
That demand from consumers is influenced by a number of factors, including the substantial increase in the use of winter wheels by today’s drivers.
In 2018, more than 65 per cent of Canadian vehicles were equipped with winter tires — up from 22 per cent in 2013, according to an Investor Overview report by TSS. The U.S. market is lagging behind but it also shows an increase: 18 per cent of drivers in “snow belt” states use winter tires, up from 8 per cent in 2013.
“These (tires) in most cases cannot be taken home with the consumer and must be left at a dealer or a service provider,” said Ismaele. “The automotive industry is changing pretty rapidly and the only way you’re going to get a customer to come in twice a year is if you have some sort of retention system, where they need to come back to you.”
