January 30, 2010
Survival of the smartest
Dealers plan to boost units, jump-start sales and charge for more services in 2010
By: Mike Manges
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Out west in Quapaw, Okla., Ron Thrasher, executive vice president of Burggraf Tire, says keeping his dealership’s distribution centers stocked with product will be a challenge. Burggraf Tire has two warehouses.
“We have a lot of momentum going right now purely because we have inventory,” he says.
Thrasher reports that some of the dealership’s suppliers have had availability problems.
“We’re just keeping orders in the system. We’re also increasing re-loads between our distribution centers. We’ve gone to twice a week at our distribution center in Texas to help keep their inventory beefed up.”
To keep sell-through at a high rate, the company now offers daily delivery to customers. “Our competitors were offering daily service. American Tire Distributors, Tire Centers LLC — they were already out there. We just had to get our share of the pie, and we’ve developed local routes to pick up additional business.”
Another successful technique that Burggraf Tire will continue to employ throughout the new year is offering weekly specials on certain tires. “Every Monday we come out with a special. We don’t make a lot of money on it, but we give our dealers (a chance) to take advantage of it.”
The program has been so well-received, “we find dealers calling on Fridays and asking, ‘What’s your special for Monday?’”
Used tire blues
Used tires are a big part of Buffalo, N.Y.-based Mr. Fox Tire Co. Inc.’s business. Problem is, the single-location dealership is having a hard time finding second-hand rubber at decent prices.
Fox Tire usually buys units from out-of-state used tire brokers, but supply is tightening, says co-owner Eric Fox. “People are driving on their tires longer.”
And due to recent price hikes on new tires, demand for what’s left in the used tire pool has increased. “Prices have doubled and tripled. It’s something we’re concerned about.”
The family-owned dealership —which caters to a predominantly lower middle class customer base — is filling the gap with economy, entry-level new tires, including Chinese-made products.
But tariffs have made stocking some Chinese tires cost-prohibitive.
When the White House’s tariff decision was announced last September, “we bought an extra 1,500 units, trying to get whatever we could at a reasonable price. We’re still finding deals, but (the tariffs are) a big concern.”
Fox’s most pressing concern is the future of Buffalo’s economy, which has been slammed by high unemployment.
“Personally, I think it will get a little stronger, which is crucial. Hopefully it’s on the rebound, but it sure doesn’t look like it (at the moment). Retail, in general, seems so desperate right now.
Clothes, furniture — my wife keeps telling me, ‘You should see the deals!’”
Has Fox been tempted to cut prices? “Our prices are lower than our competition across the board, but we take it case-by-case. If it takes going down a few dollars to make a sale, we do it. We honestly take each customer on a case-by-case basis.”
That’s what Fox Tire will continue to do, he adds. ■
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