Dealers Respond to Spiking Fuel Prices
“We’re Going Into Uncharted Territory'
Independent tire dealers are preparing for the knock-on impact of escalating gas prices. And some are already feeling the squeeze.
Dale Donovan, the owner of Donovan’s Tire & Auto, a three-location dealership based in Cincinnati, Ohio, first saw $4 a gallon prices in his area this week.
“The other thing we’re seeing is fuel surcharges,” he says.
Tire and parts distributors “are starting to charge us for fuel. That’s probably the biggest thing we’re seeing right now. I have tires delivered to my shops twice a day.”
As gas prices climb, Donovan worries about people driving less. “I’m concerned people are not going to be taking family trips like they used to.
“We’re going into uncharted territory. I’m concerned people are going to say, ‘We can’t drive as much as we used to.’ I firmly believe that it’s going to affect the economy.
“People are just not going to put the miles on. They’re going to start conserving fuel. It’s inevitable.”
Joe Ramsay, president of Pit Stop Auto Repair, an eight-store dealership based in Venice, Fla., says high gas prices - combined with concerns around economic fall-out from the Russia-Ukraine war - have created a sense of “unease” among his customers and vendors.
“When you have unease like that, people get conservative,” he notes.
Many of his auto parts vendors are changing their delivery schedules. Some have cut back on hot-shot deliveries.
“Some of that was initially related to manpower (issues), but now with the price of fuel, a lot of them are tightening up even more.”
Ramsay adds that Pit Stop’s main tire supplier, U.S. AutoForce LLC, has not altered its delivery schedule.
One unexpected benefit of rising fuel costs for his dealership could come in the area of recruitment.
Ramsay is hearing from auto service technicians who are employed by other companies and are looking for shorter commutes.
“I've interviewed three good technicians in the last week-and-a-half who are hurting due to gas prices. They're driving 30-plus minutes each way.
“All of them are saying, ‘It wasn’t that bad when gas was $2.79 a gallon, but now it’s over $4.’ They’re all looking to work someplace closer to home. We’ve picked up two of them so far.”
“Rising costs are having a direct effect on our business and are something we are watching closely,” says Wes Holt, president of Hilltop Tire Service, a three-store dealership in Des Moines, Iowa.
“Not only is it costing more to move our inventory around between our three locations, but we also are starting to see fuel surcharges added to our incoming freight.”
The price of fuel isn’t the only issue for Holt to deal with right now.
“With inflation affecting tire prices as much as it has in the last year, I feel it will be hard to pass these added costs onto the consumer and will be something we will have to absorb.
“I am taking a hard look at my budget and forecasts this year and fully anticipate adjusting for lower margins.
“Another aspect to consider is the effect (inflation) will have on our customers and their vacation plans this summer,” says Holt.
“Throughout the history of our business, we have seen customers plan trips closer to home or even cancel trips altogether when the price of gasoline rises too high.”
To off-set the rising cost of fuel, “we’ve been consolidating some routes and keeping our eyes open to see what the competition is looking at doing as far as any type of fuel surcharge that might be coming down the road,” says John Ziegler Jr., vice president of Ziegler Tire, which is based in Massillon, Ohio.
Ziegler Tire has six retail stores, 21 retail/commercial outlets, one strictly commercial location and two distribution centers across a multi-state area.
“We're considering surcharges. If it looks like things are going to be persistent for a while, we’re going to have to do something.”
“It’s too early in the game to tell '' what will happen on the retail side.
“This time of year is a little sluggish anyway. We’ll probably have a better indication when we get into April and May. I think we’ll have a better idea then. It could be a while” before things normalize.
“It’s just another shovel full on top of everything else - pricing and supply and things like that. It’s all a challenge right now.”