There has always been a segment of the tire buying public that has upgraded to performance tires and wheels. But now the OEMs have gotten in on the performance act, and many consumers need performance tires to replace the ones that came as original equipment.
As this market segment expands, tire dealers need to be able to identify who these consumers are, and what their special needs are. They also need to be aware of how swings in the economy and evolving technology affect this sector.
Modern Tire Dealer recently spoke with Hank Feldman, president of Performance Plus Tire & Automotive, Long Beach, Calif. His single-store operation specializes in servicing vintage and hot rod vehicles, and is a full-service tire store with 10 service bays and 35 employees.
Feldman says he sells about 5,000 units a month between the retail store and his website. He has kept up with an evolving market by being a dealer who refuses to be left behind.
MTD: How has the Internet affected performance tire and wheel sales?
Feldman: What the Internet has done to the performance tire business is really educate the consumer more. It’s become much more price-sensitive because now people just walk into your store with a price from the Internet and they say, “Can you match it? Can you beat it?” They’ve done their homework in terms of what they want.
How we differentiate ourselves is by having a huge inventory and having our people well-trained.
It can be dangerous answering questions for consumers if you don’t know the answers. Tire salesmen have to be a lot more educated than they were five or six years ago.
I’ve found that the Web has been a phenomenal draw for local service. We have 50,000 SKUs at our location. We’re drawing from outside of our eight- to 10-mile core business area that we would draw from for our performance product because of our price and availability.
Before the Web was the tool that it is today, we’d probably never get that business. For someone like us, a single-store operator, we couldn’t afford to do the advertising that would get to that consumer. I think the Web is going to continue to be a valuable tool in local searches and national searches.
MTD: What is a major current trend you see in the market?
Feldman: There are more performance tires at the OE level, and that’s been a trend in the last several years. The current performance tire market is strong. With all the plus sizing that’s gone on with the OEs, the sizes have proliferated up and it’s broadened the performance market.
Unless they are a mega-economy type model, virtually all the new cars in the next couple of years are going into 19-, 20- and 21-inch applications. We’re starting to see glimpses of it with European vehicles and also out of Korea. The sizes at the OE level are proliferating up.
One good thing for the tire dealer is that the SKUs are growing, so it’s harder for the Costcos of the world to be in the business and have the inventory on the shelf. It’s probably harder for a lot of the smaller dealers who are more service-oriented to be in the business.
The one caveat to that is the tire manufacturers have available data reports that will tell us what the top SKUs are in our market area based on car registrations. I’ve gotten those reports and it’s amazing how accurate they are. Some manufacturers will tell us if it’s a Tier 1, Tier 2 or Tier 3 type of buyer, based on the age of the vehicle. In our market, we’re still seeing a lot of 235/75/15s, meaning that there are lots of Ford Explorers and Chevy S10s out there.
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MTD: What consumer demographic poses the biggest challenge to selling performance tires and wheels?
Feldman: Selling to kids is the challenge. We’re competing with iPhones and iPads. My son has friends who are 18 and 19 years old and they’re just getting their driver’s licenses. They don’t care that they don’t have performance tires and wheels.
That’s a big challenge for the custom wheel business because to many young consumers, cars just aren’t that important. I don’t think it has anything to do with gas prices.
For the kids who are into cars, we see a lot of first-time buyers, this time of year in particular. They’re getting their income tax returns so they’re buying custom wheels and tires.
At the other end we’ve got the baby boomers who have disposable income, and they are passionate about cars and they’re doing the same thing. The economy has eliminated a lot of the other types of buyers that we had pre-2008 when soccer moms were coming in here and they had to be like every other soccer mom.
MTD: What strategies can tire dealers employ to increase sales?
Feldman: We attend 40-plus car shows a year across the country and get great exposure at all those events, which are focused primarily on the vintage and collector car market. We print and distribute a catalog, and we’re able to shake hands and really talk to a lot of people.
We have a robust website and we direct them to it (www.performanceplustire.com). We also bring them in to our store based on just being out there in front of car people. Maybe besides a collector car they have a performance car, or their friends do. Whenever you do these events, you’re in front of a real audience that’s defined.
MTD: What’s the market like for performance tires and wheels packaged together?
Feldman: I think that’s the biggest market because you’re able to get the plus application and you’re able to sell the wheels. You’re transforming the customer to make an emotional decision about fashion as well as performance, whereas if you’re just replacing tires there may not be the opportunity to sell them a performance tire other than what the car has rolled in with.
MTD: Do you see many cash-strapped consumers buying only two performance tires versus four?
Feldman: On the replacement side, sometimes we do. Some of these people are getting sticker shock coming in to buy a pair of tires on what was maybe a mid-priced vehicle that has a performance application. It just comes down to economics.
For example, the Mercedes-Benz S Class often will wear out the rear tires two-to-one versus the front tires. It wouldn’t make sense to replace them if you don’t need to replace them.
MTD: How has the economic crisis affected the performance wheel market?
Feldman: Since the economic meltdown in the last couple of years, the volume of most of the wheel business has funneled back to the bigger wheel guys who stock the product and are really in the wheel business.
Before the recession, all the Firestone stores and Goodyear stores were selling wheels. Everyone was. When the economy slowed down, the market shrunk dramatically and the more passionate buyers really gravitated toward the dealers who have the best inventory and the best selection. We’re one of those guys.
MTD: Where is the performance tire/wheel market heading?
Feldman: It’s going to continue to grow based on what’s coming down the pipeline from the OEMs. They are outfitting more and more new vehicles with performance tires. They’re using them for better handling, and the suspensions are more highly tuned and they require a more sophisticated tire.
I think we’re going to continue to see larger diameters, which are going to be more performance-oriented.
That trend goes for wheels, too. We’re already seeing it change. We’re selling very, very few smaller-diameter wheels anymore.
MTD: Do you have any other advice for tire dealers?
Feldman: They need to be educated. We require our staff to regularly go online to the education programs on our vendors’ websites. They have to take several tests per month so that they’re up-to-speed on what’s out there in the marketplace.
When the consumer comes in, our staff members are able to help them make the right decision based on that education. That is opposed to just trying to sell what they’ve got on the shelf, which can come off as unprofessional or dishonest.
