Embrace These Changes to Ensure a Profitable 2023

Aug. 14, 2023

We are now into the second half of the year. By most accounts, tire sales have been flat, but have been offset by rising auto service work.  

Some of the increases in auto service sales can be attributed to the industry’s correct decision to continue to increase labor rates. (You should be charging at least $150 an hour, if not more. And you should be spending most of that increase on retaining employees through education and pay raises.)  

As an overall industry, we have made great gains against the other trades, but are still behind, in general. So what changes are you planning for the second half of 2023? 

By now, you are probably aware that many consumers are concerned about a possible recession and are pulling back on non-required spending. That means a probable dip in alignment sales, flushes and other maintenance-oriented work at your dealership. Typically, when this happens, tire dealerships try to increase car count. 

An increase in car count usually comes from advertising oil changes or brake work and maybe air conditioning or electrical system checks. Remember, a consumer in our industry has three main concerns: they want their vehicle to start, stop and be comfortable.  

It is important that your service advisor probes customers about what level of vehicle inspection they are interested in. It’s OK if a customer says they don’t want an inspection. Our job is to advise not sell.

You also can dig into your point-of-sale system’s vast database of existing customers and declined work. And with some add-on software, you may even be able to predict upcoming services and use targeted outreach like email or text messaging to remind customers you’re open and willing to service their vehicles. 

Improved vehicle inspections are very important to a dealership’s success when consumers pull back their spending habits. It’s critical to not miss good opportunities with customers who are still interested and are able to pay for repairs and maintenance. 

On the tire side of your business, have you looked at your inventory this year? Should you make adjustments on the amount you keep and the tire lines or tiers you stock? Consumer sentiment has shifted decidedly to lower-tier tires. I’m not suggesting pulling away from recommending top-tier tires, but having the ability to meet customer expectations will be vital to your dealership’s financial success.

Employee recruitment remains a challenge for many independent tire dealerships as we move into the second half of the year. Have you had any success in recruiting new talent? It seems competent workers are getting harder and harder to find. And while increases in pay and better working conditions help, you should also look into new ways to find employees. Putting a curbside “help wanted” sign or just listing a job posting on the internet won’t be effective. A truly multi-faceted approach to recruiting in today’s day and age is critical. If whatever you are doing isn’t working, try something else. 

Quality education programs should also be on your radar. Particularly, good evidence-based training on relationship selling is important when consumers start to pull back. Sometimes when service advisors hear the word “no” from customers a lot, they either get aggressive in how they respond to consumers or they stop recommending services together.  

Service advisors need to be empathetic to the customer’s needs, yet hold the line on presenting items that result from a good inspection and offering up various solutions to the customer’s problem. That is a learned skill.  

Quality education programs in sales will be rooted in consumer behavior, communication and problem solving. Quality education programs also will use a variety of methods to help students learn. There will be elements of group work, discussion, games and some kind of way to test retention. You have to measure what your employees will walk away with after the time they spend in class. 

Finally, what are you changing about yourself? It’s important for you, the boss, to make personal adjustments as the retail climate changes. Do you need to be more on hand or maybe less on-hand? Is it time to bring back one-on-one meetings with employees to better understand what their day to day is like? Maybe you can read a book on leadership and take away a few pointers to help make you better at your job? 

The start of the second half of the year is a great time to look both in the rearview mirror and ahead through the windshield. Just make sure your changes are meaningful and have a desired outcome you can track and achieve.

About the Author

Dennis McCarron

Dennis McCarron is a partner at Cardinal Brokers Inc., one of the leading brokers in the tire and automotive industry (www.cardinalbrokers.com.) To contact McCarron, email him at [email protected].