Free versus fee: Should you give nitrogen away or charge for it? Two dealerships take opposite positions but still use nitrogen inflation to make money
One dealership is among the largest independent tire store chains in North America with more than 70 retail stores. The other is much smaller, with only two retail outlets.
One started filling passenger and light truck tires with nitrogen last month. The other began offering inflation more than a year-and-a-half ago.
One includes nitrogen in its out-the-door price. The other charges a separate fee for it.
The first dealership is Allen Park, Mich.-based Belle Tire Distributors. The second is West End Tire of Winnipeg, Manitoba.
Both companies offer nitrogen inflation as a way to differentiate themselves from competitors in their respective, ultra-competitive markets. But their philosophy behind selling -- or not selling -- the service is quite different.
'Nitrogen is a complement'
Belle Tire doesn't charge extra for nitrogen. It's part of the dealership's final tire price, along with mounting, balancing, valve stems and tire disposal.
"We're in the business of selling tires, not nitrogen," says Belle Tire Vice President Jeff Kruse. "Nitrogen is just a complement to the tire."
Belle Tire launched its nitrogen program at 75 stores throughout Michigan and Ohio on April 17.
"We look at it as a way to drive value. You're providing (customers) with a benefit over inflating a tire with regular air."
Most tire dealerships that offer nitrogen "look at it as a profit center. That's a positive way to look at many things, but if you have a product or a service that provides a lot of value to consumers and helps a tire achieve what it should, then you should provide it to them."
Belle Tire looked at a variety of nitrogen inflation machine suppliers before deciding to use equipment made by Ingersoll-Rand Co. Ltd.
The dealership was impressed with Ingersoll-Rand's "wherewithal to accomplish a project of this size and their ability to accomplish the specifications that we set forth."
Those specifications went above and beyond the standard nitrogen set-up.
Belle Tire asked Ingersoll-Rand to pipe lines from nitrogen generators into and through all of the dealership's tire machines "so our staff doesn't have a choice but to put nitrogen into tires," according to Kruse.
"That way, we get 100% inflation with nitrogen in every tire we mount."
Installation of equipment and ancillary items at the 75 stores took about six weeks and cost "very many hundreds of thousands of dollars."
The inflation machines themselves are not complex, he says. "They have a series of filters that have to be routinely changed and a large membrane that could need service if your air system doesn't have a dryer or injects oil into it. Our people are prepared to make changes on the filters."
Belle Tire began testing nitrogen in late 2004 via a pilot program at one of its outlets without any kind of marketing push.
During the test program, salespeople sold the concept simply by describing its benefits.
"Most customers don't understand the science (behind nitrogen inflation) and really don't want to understand. They just want to know what the benefits are. Once they understand the benefits, then they're excited by it."
Belle Tire does not charge for nitrogen top-offs.
"The product is free to any customer who purchases a tire from Belle Tire or has purchased a tire in the past from (us). We hope there are customers out there who may be planning on buying tires from a competitor who will instead choose to buy from us because (even though) it's the same tire and the same price, they will derive more value by purchasing from us."
Belle Tire has launched a major electronic advertising campaign to publicize that it now offers nitrogen. The campaign includes information about the service on Belle Tire's corporate Web site.
The company has created "very Dick and Jane" point-of-sale materials for salespeople to give to customers. It also has come up with its own term for nitrogen inflation: "Nitro-Nize."
"How do you differentiate your nitrogen from the other guy's nitrogen? You can't. Nitrogen is so generic, it means nothing to the customer. But Nitro-Nize sounds like it has a lot of energy and science behind it."
Belle Tire will trademark the term. "It's a marketing tool."
West End Tire doesn't have the economies of scale that Belle Tire enjoys. But it has become a nitrogen inflation leader in its own market.
"We're strong on service and nitrogen is part of the total package," says West End Tire Sales Manager Charlie Pantel.
West End Tire doesn't give nitrogen away. It charges a healthy $5 per tire for inflation.
The dealership -- which also offers nitrogen for trucking fleets -- added the service to its menu in October 2004 after seeing it done at a local Costco Wholesale outlet.
It wasn't a snap decision, says Pantel. "We probably did five to six months of research on the Internet and asked questions of different (equipment) companies. We figured it would be something we could offer to our customers as an added benefit."
Nobody else in Winnipeg was filling tires with nitrogen at the time. West End Tire began testing the service at both of its retail stores. "We went all out. We equipped both locations with generators made by Parker Hannifin Corp.
"We pretty well decided we were going ahead with this after two months of investigation."
Pantel says the dealership didn't know where to start when it came to pricing. "We talked to some dealers in the States who were equipped with nitrogen. They gave us the price they were going with and we took a chance.
"When we first got the equipment, we did some radio ads, the local newspaper -- a very hard marketing push. We were getting customers calling us and saying, 'I don't need tires but I'm very interested in this nitrogen. Can you tell me about it?' It created some excitement."
With that came consumer questions. Some customers worried that nitrogen was flammable. "Lots of people also figured this was a product that's separate from air and that we actually have to buy it.
"About a month ago, we had an individual come in for a tour of our facility and at the same time showed him our nitrogen generator. He said, 'Where do you keep the bottles of nitrogen?' We said, 'It's all compressed air going through the filters and eliminating the oxygen.'"
West End Tire doesn't charge for topping off with nitrogen. But it does charge to fill tires that were bought somewhere else. "If you buy the tires down the street and (the seller) doesn't offer nitrogen... we have no problem with you coming over and seeing us."
Filling tires with nitrogen is almost 100% profit. The only cost, says Pantel, is equipment maintenance, which he calls "minimal."
West End Tire will continue to charge for it. "We believe that you get what you pay for with us. Nitrogen is an added service.
"When we give the (price) to customers they hardly ever blink an eye. If we explain the benefits -- which takes about two minutes -- nine times out of 10 we get the sale."
What happens when two hot trends converge? How nitrogen interacts with tire pressure monitoring systems
Some four million cars on the road today are equipped with tire pressure monitoring systems. More independent tire dealers are filling tires with nitrogen. What impact will nitrogen have on tire pressure monitoring system (TPMS) sensors?
None, says Kevin Rohlwing, senior vice president of education and technical services for the Tire Industry Association.
"According to TPMS sensor manufacturers, nitrogen won't affect the life of the sensor one bit.
"Nitrogen affects the need for air pressure maintenance. You're not going to have to adjust (psi levels) as often if you have nitrogen because it bleeds out slower (than air)."
At the end of the day, TPMS sensors read compressed gas, according to Rohlwing. "You could fill a tire with propane, and the sensors would read propane."
Not just for consumer tires anymore: Nitrogen also benefits OTR and medium truck tires
The benefits of filling commercial truck tires with nitrogen are the same as filling passenger and light truck tires with nitrogen, says Steve Motta, who works in product development for Orlando, Fla.-based Vehicle Inspection Systems Inc., which sells nitrogen inflation equipment for commercial applications.
"It boils down to two things: reduced maintenance and improved tire life. You spend less time checking your tires (and you) top off your tires less frequently.
"The improved tire life component is linked with improved fuel economy by maintaining pressure in the tire more accurately and not running under-inflated. Tires will last longer and fuel consumption will be at ideal levels.
"Also, putting nitrogen in tires will help preserve casing life because rubber is less prone to oxidization. As conventional air flows through rubber, it ages and deteriorates the rubber, and nitrogen won't do that."
Motta believes that nitrogen inflation is better suited for small trucking fleets. "Some of the smaller fleets are quicker to adapt because they have one maintenance location."
OTR tires also benefit from nitrogen inflation, says Bill Gibson, marketing manager for ARI-HETRA, a nitrogen equipment manufacturer in Manassas, Va.
"If you're in a mine where flammability (is a risk), you might want to fill a big tire with nitrogen."
Parker Hannifin Corp. is taking commercial tire nitrogen inflation one step further with its new Mobile TireSaver system that's designed for outdoor use on service trucks.
"The (machine's) membrane has stable performance versus temperature changes," says Parker Hannifin Account Manager David Konnaughton. "You can use it in sub-zero temperatures."
The unit is ideal for inflation at truck yards, he says. "For a commercial dealer to offer nitrogen in his shop is one-half of the equation. A good amount of his business is in the fleet yard."
Winnipeg, Manitoba-based West End Tire is testing nitrogen with a local trucking company. The dealership has filled tires with nitrogen in about 75 tractors and 100 to 125 trailers and is monitoring fuel consumption, mileage and irregular wear due to inconsistent inflation pressure levels, says West End Tire Sales Manager Charlie Pantel.
He says the test will yield data that his employees can share with customers at the retail counter. The theory is that whatever a trucking fleet saves with nitrogen, retail buyers "will save a proportionate amount," according to Pantel.
Got nitrogen?: If not, here's where to get it
The following companies manufacture or market their own nitrogen tire inflation equipment:
Air Products and Chemicals Inc., Allentown, Pa., (610) 481-4911, www.airproducts.com. Product: UltraFill nitrogen tire inflation systems
ARI-HETRA/Automotive Resources Inc., Manassas, Va., (800) 562-3250, www.ari-hetra.com. Product: N2 Complete Filling Station
Atlas Copco, Westfield, Mass., (877) COPCO-N2, www.atlascopco.us. Product: GN Dual Output inflation system
Branick Industries Inc., Fargo, N.D., (701) 281-8888, www.branick.com. Product: Branick Nitrogen Tire Inflation System
Champion/Gardner Denver Inc., Princeton, Ill., (815) 875-3321
www.gardnerdenver.com. Product: Nitrogen Advantage tire inflation system
Golden Chest International Ltd./Coseng Automotive Equipment Ltd., Hong Kong, (852) 2851-9211, www.coseng.com.cn. Product: G-LN nitrogen generators
Ingersoll-Rand Co. Ltd., Annandale, N.J., (800) 376-TOOL, www.irtools.com. Product: Ingersoll Rand Nitrogen Generator
Mohawk Rubber Sales of N.E. Inc., Hingham, Mass., (800) 242-1446, www.mohawkrubber.com. Product: Mohawk Rubber L401
NitroFill/Kreska Technologies Inc., Pompano Beach, Fla., (954) 788-8748, www.nitrofillnow.com. Product: NitroFill
Nitronics Systems Inc., Lafayette, Colo., (303) 604-1187, www.nitronics.com. Product: TireLast Nitrogen Station
N2Revolution Inc., Sunrise, Fla., (954) 741-4278, www.purigen98.com. Product: PurigeN98
On Site Gas Systems Inc., Newington, Conn., (860) 667-8888, www.onsitegas.com. Product: TF Pro Series
Parker Hannifin Corp., Haverhill, Mass., (800) 343-4048, www.parkertiresaver.com. Product: Parker TireSaver Nitrogen Generator
Quincy Compressor/Enpro Industries Inc., Quincy, Ill., (217) 222-7700, www.quincycompressor.com. Product: N2Gen Defender Series
RTI Technologies, York, Pa., (800) 468-2321, www.rtitech.com. Product: RTI NitroPro
Tire Service Equipment Manufacturing Co. Inc., Phoenix, Ariz., (800) 223-4540, www.tsissg.com. Product: TSI Nitrogen Generators
Vehicle Inspection Systems Inc., Orlando, Fla., (800) 219-6256, www.visnitro.com. Product: VIS Nitro