Selling UHP tires in a tight economy
The inquiring minds at Modern Tire Dealer wanted to know how ultra-high performance (UHP) tire sales are faring in this economy. So they asked me to find out. What I’m hearing from a lot of dealers is, “People in my market don’t have the money to buy UHP tires.”
As a high performance car driver myself, that sounded a bit defeatist. With what are customers with original equipment UHP tires going to replace them? If their customers already had upgraded to custom wheels and UHP tires from OE touring tires, would they really consider returning to 70- and 75-series tires?
The answers to these questions, and others, regarding success in the UHP market, are the focus of this report.
You must commit
To get the opinions of a representative group, I talked with dealers across the country. Their input was direct, candid and represented each end of the UHP sales and service spectrum.
One dealer told us that although he has a strong retail automotive tire and service business, he doesn’t sell UHP tires at this time. Another dealer told us, “UHP is 25% of my total business, and there are few dealers in my area who participate in this segment.”
Two dealers told us their businesses are all high performance and ultra-high performance. One of them has become his market’s performance tire guru for fitments on hot rods, custom cars and classic vehicle restorations. His success didn’t come quickly — and he’s not a tire dealer in the traditional sense of the word. He’s more of a “tire consultant.”
He is called upon by a lot of people interested in UHP tires for their hot rods, Pro Street and road race vehicles, for track day tires, etc. Using his vast knowledge and experience, he specs out what they need, gives them price quotes (based on the prices from his dealer friends), and takes a commission. He sells a lot of tire and wheel combinations and has the mounting and balancing done by shops that enjoy the extra business.
The other dealer with 100% of his sales in UHP products and services actually backed into the business. In the 1980s, he became the poster child for Sumitomo brand tires when Sumitomo introduced its first UHP radial tires. He had a ton of road racing experience and his shop was the largest and most active in the northern New Jersey area.
He was winning races with Sumitomo tires, and soon was selling them to other racers.
Sumitomo heard about this dealer and the company’s advertising manager created “testimonial” ads featuring him. This helped introduce the brand to other dealers. Since then, he has added import and domestic race car work to his repertoire, and his shop is always busy.
“My tire business comes from the success and reputation of my performance shop and our race track and teaching program,” he says.
When asked about his location and its economic strength, he said his shop is located in an area just above the low end of the scale. And he told me the average age of his customers is just shy of 46 years. Many of them do not live close to his location
However, they make the drive because of recommendations from other customers and the dealership’s expertise.
What about the core reasons for the success of those dealers with 15% to 25% of their businesses in the UHP segment? It isn’t about the brands of tires they carry, although that plays a part in their success. It isn’t about the equipment their shops have or their point of purchase displays either, although both of these add to the sales experience.
It isn’t about any advertising, as that plays a minor part in the dealers’ marketing programs.
The real reason for their success comes down to the two simple words we utter during a wedding ceremony: “I do.”
These words signify a commitment. Based upon my own experience and talking with many dealers, that’s the bottom line on UHP tire sales, regardless of economic conditions.
The first requirement for a dealer’s commitment is a strong belief that UHP tires can be a viable and profitable part of retail sales. More importantly, dealers must believe these tires represent an improvement for the buyer in all aspects of driving. One dealer said, “If you do not believe 100% in your heart that UHP tires represent real value for the customer, you will not be successful in selling them.”
So how do dealers define commitment? How do they train their respective staffs to be just as committed? How do they get that message to their customer base?
Several UHP dealers with whom I spoke also sell wholesale to “custom” and “speed shops” in their areas. They have become the “experts.” Even performance shop owners call them when they have questions about the technical aspects of UHP tires.
How far do you go?
The bottom line on selling UHP tires is that you must make a real commitment to the UHP market and get all the training available for yourself as well as your sales professionals.
I also believe that as a dealer, you must equip your own personal vehicle with UHP tires and custom wheels. Without doing this, you are limiting your sales potential.
“Pimping your ride” does more than promote your UHP products and your faith in them.
By riding on them every day, and understanding how they deliver more road feel, faster turning, better braking and great traction wet or dry, you will be able to translate your faith and driving joy to a potential customer.
One dealer told us that of his five salespeople, three are UHP tire sales-certified by at least one manufacturer. There is always one UHP salesperson on the floor to help customers looking for UHP tires and services. And these people truly believe in their products, as they drive on them every day all year long regardless of weather. (In the Snow Belt, they use winter UHP snow tires.)
I asked the dealers how their sales professionals paid for the wheel and tire combination for their cars. Three told me they will lend tires to their sales professionals if these individuals are highly qualified, but actual ownership of these wheels and tires remains with the dealer.
As an example of how important personal experience is with a product, about 15 years ago Porsche was dueling with Audi in the same car dealerships.
This raised Audi’s sales but hurt Porsche’s, pushing sales levels below what they were before they joined together. Why? After some research, it was discovered that none of the dealers were willing to give their salesmen a new Porsche to drive; they gave them Audis instead. As a result, when customers came in, salesmen moved them into products they truly believed in — Audis, not Porsches.
Being able to explain the technical differences between touring and UHP tires is critical, but really believing in them is more important.
Making the sale
Many customers will not be aware of the trade-off they will be making between touring tires and UHP tires.
The sales professional must explain that the ride may not be as smooth and there will be more feel from the road. That is part of the UHP tactile driving experience.
They also must explain the difference in wear they will get, which will be less compared to their touring tires. And, if the customer is talking about something in the Plus-Four or more range, the message must be made clear that these tires have very little sidewall to deliver a cushion of air to absorb road irregularities, causing a rough ride.
The key is to explain the differences, both positive and negative, before the purchase so no unreasonable expectations are created.
The UHP tire dealers with whom I talked all charge more for mounting and balancing low profile tires and aluminum wheels compared to OE steel wheels and touring tires.
Part of the reason is that the equipment required is more expensive (see related story, “Proper perspective”).
A UHP sale generally takes a bit more time, but not enough to say it is a labor intensive issue. All the dealers told me the most important thing in the sales process, once the customer agrees on the tire or tire and wheel package, is to get the customer to sign a job order and into the waiting room as quickly as possible.
They also need to get the car into the service bay quickly. So having the proper inventory is important — especially with the younger buyers who are not used to waiting for anything.
If your UHP tire wholesaler is nearby and will make deliveries quickly, a low inventory is possible. But if he is only capable of delivering once a day, your sales professionals had better be really effective at explaining why the money burning a hole in the customer’s pocket cannot get him what he wants right now and why the one day wait is worth it.
The actual number of UHP tires on hand must be sufficient to handle the common tire sizes required.
It’s also good to maintain a small but adequate inventory of custom wheel sets.
Remember, the customer can go online and find tire and wheel sets, mounted and balanced, for low prices. They even can get them next day if they are willing to pay the freight cost.
Surviving and thriving
I asked dealers what they think the UHP market will be in 2009.
All of them said replacing OE UHP tires for customers, replacing tires on vehicles that have custom wheels already installed and selling after-the-sale UHP services will continue to generate a lot of revenue.
They do feel it will be hard to generate a lot of new conversion business, but also believe that they need to be ready to answer the call when a real UHP prospect walks in the door.
Tire warranties are likely to be big sellers, especially in the UHP market, because of the cost of the tires and wheels themselves.
Getting new UHP customers still will require marketing. You may consider a customer “referral” system, where you offer a coupon to a satisfied customer and ask him or her to give a coupon to a friend looking for new tires.
The new customer gets a discount and the person giving it to a friend gets a free oil change, as an example.
Some dealers told me UHP customers will drive their tires down to the legal limit, 2/32-inch tread depth — not the 4/32-inch that some manufacturers recommend.
UHP owners will try to get every last mile out of their tires and you, the dealer, will need to stay on top of inspections for these customers. You may need to offer free rotations and inspections to generate return business.
Yes, the economy is tough right now. It will stay this way for at least two years, according to “experts,” so every dealer will need to find the silver lining in his or her own market.
As much as you may think this is crazy, UHP sales could be the key to survival. Their profit margins are better and they bring in unique service opportunities.
Dealers also are going to need and must develop a “financing” option that allows customers to pay for their tires and service over a longer time period.
Major tire companies already have this for their dealers, but the independent tire dealer will need to get creative while remaining careful.
Our participating UHP dealers all feel that they need to step up their wheel sales and service as well. And they all will find a way to do it.
Why? This economy demands more cash flow and income for dealerships, and because dealers genuinely believe in the benefits of UHP tires for their customers.
This belief is reinforced every morning when they drive to work and in the evening when they drive back home. ■
UHP-related services: Follow-through and upgrades keep customers coming back
What services are you selling along with ultra-high performance tires and wheels?
Here is a list of the “special services” and products that can keep the customer returning to your dealership every 5,000 to 10,000 miles, courtesy of two tire dealers who specialize in UHP tires:
• annual four-wheel alignment checks.
• yearly tire balancing.
• quarterly nitrogen tire pressure service.
• quarterly to biannual tire rotation.
• synthetic high performance oil conversion.
• vehicle brake system upgrades.
• electronic tuning modifications.
• high flow EPA legal catalytic converters.
• quarterly to biannual “toe” adjustments, plus tire inspection.
•high performance shocks, struts and springs.
• high performance exhaust system conversions.
Racing enthusiasts also have been known to modify their vehicle with anti-sway bars, racing seats, racing seat belts and bolt-in roll bars.
Matt Strong is a 30-plus year tire and automotive industry veteran. His career has included managing marketing activities for a global tire manufacturer; operating a large tire retail/wholesale business; working in tire and automotive public relations and competing in numerous drag and road racing events. He has contributed a number of articles to Modern Tire Dealer magazine.