Modern Tire Dealer - November 2011

Budgeting for success: It’s time to prepare for 2012 NOVEMBER 2011 • VOL. 92, NO. 11 • TEN DOLLARS • A BOBIT PUBLICATION

THE INDUSTRY’S LEADING PUBLICATION

SPORTS MARKET ETING

OEMs package hot wheels and cool tires Incoming President Larry Brandt talks TIA

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Budgeting for success: It’s time to prepare for 2012 NOVEMBER 2011 • VOL. 92, NO. 11 • TEN DOLLARS • A BOBIT PUBLICATION

THE INDUSTRY’S LEADING PUBLICATION

SPORTS

MARKETING Playing the numbers game OEMs package hot wheels and cool tires Incoming President Larry Brandt talks TIA

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Cover feature 20 The sports marketing trend

Baseball, football, basketball, even ultimate fighting promote tire brands to the masses

The Industry’s Leading Publication November 2011, Volume 92, Number 11

Departments 4 Editorial Are tire prices too high? I say yes. Consumers are balking at paying more and more

6 Online Photo by Chris Walia

Dateline: Las Vegas, Nev.: Get your up-to-theminute show news

8 News/views

28 (Motor) SPORTS marketing

Photo courtesy of The Tire Rack

Goodyear’s 59-year relationship with NASCAR increases brand loyalty and technology transfer

32 Hot wheels, cool tires The market for UHP tires packaged with custom wheels evolves as OEMs offer more high-performance packages

36 TCi: one company, two divisions Wholesale? Commercial? Each is a profit center

38 Making customer service part of your brand

A logo is only half the battle. The author combines his training skills with the teachings from his favorite business book to help you sell more tires and service

48 Budgeting for success

Think of a budget as a road map to profitability

60 Larry Brandt: TIA must grow

Keeping its members and the industry educated is another priority, says the incoming president

A new Continental tire plant will rise in Sumter, S.C.: The half-billion dollar investment will produce 8 million tires by 2021

18 Ludwig Report With gas prices down and driving levels up, expect increased tire demand

64 TPMS Special tools needed for the Audi Q7: New or relocated tire(s) must be initialized

66 Counter intelligence ‘I have to think about it’ - Countering these dreaded words at the sales counter

68 Business insight Mobile barcodes: What’s with all the little boxes? Tag code uses appear endless and are limited only by your imagination

72 Business insight Plans are nothing without actions: SalesMinded dealers know that real change is the key to execution

82 Your turn Planning on servicing hybrids? Expect investment in equipment and training to be costly, reader says

74 Products 78 Quik-Link 79 Classified

Modern Tire Dealer is a proud member of:

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Editorial

Are tire prices too high? I say yes Consumers are balking at paying more and more

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ith apologies to Bob Barker and Drew Carey, the Price is Wrong, not Right. I’m referring to consumer tire prices, which have been increasing rapidly, and regularly, for the last four years.

From 2007 through 2010, average passenger and light truck tire prices rose 22% and 24%,

By Bob Ulrich respectively. That doesn’t even include this year.

Those increases coincided with skyrocketing raw material costs. They weren’t always easy to pass on because consumers were not used to paying such high prices for what they often perceived as a commodity item.

Those “4 for $99” deals didn’t help. But after years of underpriced tires, the increases were welcome. At least grudgingly, consumers seemed to understand why. Perhaps all the press about the sizable tariffs on consumer tire imports from China helped.

Tire pricing can be a loss leader in the aftermarket. Back in 1993, Tire Kingdom in Orlando, Fla., was selling a P155/80R13 for $5.95! At the time, retail tire dealers in Orlando were paying anywhere from $18 to $22 for that size, which means the retail “markup” was as much as minus 270%!

They didn’t make it up in volume.

From the manufacturers’ perspective, however, there are no loss leaders, unless they want to dump a bunch of tires in order to increase existing market share.

They have to make money, and when their costs go up, it’s only logical and fair for their tire prices to go up, too.

Is there a limit to how much they can raise prices? I think there is, and that limit is upon us. Just look at the signs.

Outwardly, tire manufacturers are offering sweet deals to consumers through their dealers, such as “$160 off Goodyear tires,” or “up to an $80 mail-in rebate on selected Hankook tires.” Michelin North America Inc. says consumers can get $70 back with the purchase of four new Michelin brand tires.

Behind the scenes, a number of manufacturers are reducing prices, even on popular tire lines.

National tire retailers are using television to get their discounts across to the masses. Mike Odell, CEO and president of Pep Boys—Manny, Moe & Jack, says tire sales have been soft.

In order to combat that, here’s what the automotive parts chain was offering via TV advertising in October.

1. Buy 1 tire for as low as $29.99.

2. Buy 2 installed tires and get a free express oil change.

3. Buy 3 installed tires and get a 4th tire free (after mail-in rebate).

As you might expect, there were restrictions to the offers (listed in fine print at the bottom of the screen).

The $29.99 price only applies to the Cornell brand, size P155/80R13. To get the free oil change or fourth tire free, the tire buyer was required to purchase a “tire installation package, road hazard warranty, valve stems or TPMS reseal kit.” And not all tire brands are included.

At NTB (National Tire & Battery), customers recently were able to get two tires free if they bought two, but they had to purchase the company’s “one-year alignment policy and premium installation.”

Another sign is the lack of consumer demand. The state of the economy has a great deal to do with that, but I can’t help but think high prices have a lot to do with vehicle owners putting off their tire purchases.

They will have to buy tires eventually, but consumers have leverage in the pricing game — 2/32nds-inch of leverage.

I like to think tire manufacturers will take these signs into consideration so that they don’t squeeze the independent tire dealer.

That doesn’t mean there won’t be more price increases soon. Some tire makers have to play catch-up with their competitors because they held off raising prices.

Cooper Tire & Rubber Co. recently announced a price increase effective Dec. 1. According to the company, past price increases have not fully covered raw material cost increases, so “modest” increases were necessary. The use of the term “modest” indicates to me that Cooper executives understand what is going on.

Still, by the end of the year, the average price of a consumer tire will have gone up another 10% in 2011. The average passenger tire at the retail level cost $109.71 in 2010; the average light truck tire sold for $155.79.

I can’t believe I am saying this, but for now, tire price increases need to stop. ■ If you have any questions or comments, please e-mail me at bob.ulrich@bobit.com.

Consumers have leverage in the pricing game — 2/32nds-inch of leverage.

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Online 3515 Massillon Road, Suite 350 Uniontown, Ohio 44685 (330) 899-2200, fax (330) 899-2209 Web site http://www.moderntiredealer.com Editor: ROBERT J. ULRICH Bob.Ulrich@bobit.com Managing Editor: LORI L. MAVRIGIAN Lori.Mavrigian@bobit.com Senior Editor: BOB BISSLER Bob.Bissler@bobit.com Contributors: Auto Service/Technical: MIKE MAVRIGIAN Training/Tire Service: KEVIN ROHLWING Industry Analyst: SAUL LUDWIG Art Director: NEAL WEINGART Neal.Weingart@bobit.com Production Manager: KAREN RUNION Karen.Runion@bobit.com Publisher: GREG SMITH Greg.Smith@bobit.com

The Global Tire Expo is part of the SEMA Show, which features thousands of trade show booths, 50-plus educational sessions and popular social events.

South and Texas: GREG SMITH Greg.Smith@bobit.com (330) 899-2200, fax (330) 899-2209

Dateline: Las Vegas, Nev.

Midwest: MICHELE VARGO Michele.Vargo@bobit.com (330) 899-2200, fax (330) 899-2209

Get your up-to-the minute show news

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odern Tire Dealer editors will bring you the latest breaking news from the Specialty Equipment Market Association (SEMA) Show and the Global Tire Expo — Powered by TIA being presented by the Tire Industry Association (TIA). The show will be held at the Las Vegas Convention Center during the Automotive Aftermarket Industry Week Oct. 31 - Nov. 4.

Log onto www.moderntiredealer.com to get the latest updates as they happen.

We’ll offer news, executive and dealer interviews, and updates on the tires, retreading equipment, auto service products, computer programs, wheels and other products targeted to tire dealers on display on the trade show floor.

With more than 100,000 industry professionals in attendance each year, the show is the premier annual trade gathering for the automotive accessories industry, the associations note.

More than 2,000 manufacturers are committed to exhibiting and showing off their newest products, SEMA reports. The displays are segmented into 12 sections, including the Global Tire Expo, and a new section — New Products Showcase — which features nearly 1,500 newly introduced parts, tools and components.

“We’re excited about this new area of the SEMA Show,” says Peter MacGillivray, SEMA vice president of events and communications. “The section gives buyers a single place to see and meet with hundreds of first-time exhibitors.”

SEMA also will be presenting more than 50 free education courses and several “pay-to-attend” educational events covering everything from truck tires, tire pressure monitoring systems and online marketing to customer service, management, environmental issues, industry trends and more Check out www.moderntiredealer.com to find out what’s happening. MTD editors will be reporting on the news that’s important for your business.

It’s show time, and we’re there for you! ■

West Coast: JOHN DYAL The Dyal Company John.Dyal@bobit.com (760) 451-5026, fax (760) 451-5039 West Coast: MARIANNE DYAL The Dyal Company Marianne.Dyal@bobit.com (760) 451-9216, fax (760) 451-9292 Automotive Aftermarket: DAN THORNTON djtinc@gmail.com (734) 676-9135, mobile (313) 410-0945 fax (734) 675-6744 Classified Sales: DONNA STEWART Donna_Stewart@cox.net (405) 513-6794, fax (360) 406-7576 Reprint Sales: KAREN RUNION Karen.Runion@bobit.com (330) 899-2200, fax (330) 899-2209 Customer/Subscription Service: (888) 239-2455, fax (888) 274-4580

Modern Tire Dealer is a Bobit Publication Executive offices: 3520 Challenger St. Torrance, CA 90503 Chairman: Edward J. Bobit CEO & President: Ty F. Bobit Chief Financial Officer: Richard E. Johnson

MODERN TIRE DEALER (ISSN 00268496) (CDN IPM #40013413) (USPS #369-170) is published monthly by Bobit Business Media, 3520 Challenger St., Torrance, California 90503-1640. Periodicals postage paid at Torrance, CA 90503-9998 and additional mailing offices. POSTMASTER: Send address changes to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks for address changes to take effect.

Subscriptions in the U.S. and its possessions, $65; Canadian, $99; Int’l surface mail, $99; Int’l airmail, $198. Single copies, $10, except the January Facts Issue, $30. Address all subscription correspondence to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks to receive your first issue. Please address Editorial and Advertising correspondence to MODERN TIRE DEALER, 3515 Massillon Road, Suite 350, Uniontown, OH 44685-6217. The contents of this publication may not be reproduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission. For your information: We sometimes make our subscriber information (i.e. fax, e-mail or mailing address) available to carefully screened organizations whose products and services may be of interest to you. If you prefer not to have your information made available, please write MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068.

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News/views

A new Continental tire plant will rise in Sumter, S.C. The half-billion dollar investment will produce 8 million tires by 2021

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ontinental AG, parent company of Continental Tire the Americas LLC, will invest more than $500 million to build a tire plant in Sumter, S.C., to meet growing demand from its aftermarket and original equipment customers.

When completed, the facility will have the capacity to produce 8 million units annually. In addition, it will employ more than 1,600 people. The new manufacturing facility will be located at a greenfield site off of U.S. Highway 521 in Sumter County.

“Increasing demand for Continental and General brand passenger and light truck tires in the U.S., as well as the improved business results for CTA, has made this significant investment possible,” said Nikolai Setzer, head of Continental’s global tire business.

Continental has announced manufacturing investments dedicated to increasing its tire production capacity in the Americas region of nearly $1 billion in 2011.

“In addition to the greenfield announcement, we are also announcing an investment of more than $4 million in our Lancaster County, S.C., headquarters to help meet the needs of our growing workforce,” said Jochen Etzel, CEO of Continental Tire the Americas.

10 years in the making

South Carolina state, local and federal programs will provide financial assistance to Continental for the project.

“Somehow the word ‘big’ just doesn’t seem big enough,” said Greg Thompson, chairman of the Sumter Economic Development Board. “In a matter of a few short years, this new facility will go from an idea to one of the largest economic drivers in our community.

“At more than $500 million, it’s the largest industrial investment the county has ever seen. And at 1,600 jobs, it will have an impact not only on Sumter County and its people, but on workers and families throughout the region.”

Continental’s planned time line is as follows: • The company expects to begin construction of the plant in mid-2012 and complete the facility in 2013.

• Serial production will begin in January, 2014.

• Production of passenger and light truck tires will ramp up to 5 million tires by the end of 2017.

• The facility will produce 8 million passenger and light truck tires annually by the completion of its second phase in 2021.

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“This important announcement is part of Continental’s growth strategy worldwide and, especially in this case, for the U.S. market,” said Nikolai Setzer, head of Continental’s global tire business.

• The building on the 330-acre site is planned to be more than 1 million square feet.

• Total hiring will be 1,700 in the state of South Carolina, including the headquarter expansion (final hiring should be completed by 2020).

The move follows an earlier restructuring at Continental. In June, the global auto component manufacturer announced that its biggest division will be the new Tires division.

In August, the Passenger & Light Truck Tires (PLT) and Commercial Vehicle Tires divisions were consolidated into one division — Tires. Setzer, former PLT division chief, took over the combined division. ■

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News/views TIA to NHTSA: Implement tire info program The Tire Industry Association (TIA) has submitted comments to the National Highway Traffic Safety Administration (NHTSA). TIA is expressing concern over the continued delay of the implementation of the tire consumer education program, the consumer information collection methodology and the promulgation of the rules for the Energy Independence and Security Act (EISA) of 2007.

The goals of the Tire Fuel Efficiency Consumer Information Program are to increase fuel efficiency, reduce greenhouse gas emissions and increase America’s energy independence. EISA, which mandates the program, called for the promulgation of rules as of December, 2009. However, the agency has yet to issue them.

Part of the comments TIA submitted are that the education of consumers on the proper inflation and maintenance of tires can begin almost immediately and be available by the beginning of 2012, and that the law must be bifurcated to allow this process to begin. The association says it does agree that the tire efficiency labeling system included in EISA requires additional deliberation.

TIA assisted NHTSA in amassing data during the first phase of the research process connecting the agency with tire dealers. However, there are serious concerns about the upcoming quantitative research phase and its reliance on data gathered via an online survey approach.

“Since NHTSA research has an especially targeted audience of consumers who are purchasing tires, conducting the questionnaires in stores is the ideal circumstance,” says TIA outgoing President Mike Berra, Jr. “Online surveying has numerous issues, including its reliance on closed-ended questions. Being online is a completely different circumstance than when a consumer is in an auto service shop buying tires.”

Berra says that because so many online surveys are veiled sales scams, many American’s avoid them because of a previous bad experience.

“Surveying a customer while they are in the process of purchasing new tires will yield more accurate results, giving NHTSA a direct, focused snapshot of the tire purchase experience,” says Dr. Roy Littlefield, TIA executive vice president.

Tire dealer 20 group sets orientation meeting Strategic Alliance Group Inc. (SAG) will conduct its first orientation meeting in Dallas, Texas, Dec. 5-6, 2011. The meeting is designed to familiarize the registered members on how the concept operates and is also designed for prospective members. The original 20 group-Dealer Strategic Planning (DSP) was founded four years ago and has grown to nearly 100 dealers participating.

There will be presentations each day from SAG’s Alliance Partners. Attendees will be able to evaluate the benefits that they will bring to Strategic Alliance Group members.

Attendance is limited to 40 members/potential members.

To register, visit www.sagtwentygroup.com and fill out the Invitation/Contact form.

SAG says that being part of a 20 group gives retail and commercial dealers enhanced advantages on planning ways to improve gross profit, reduce expenses, re-engineer their business practices and implement management operating systems.

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News/views

bites From left to right: Marty Sanders and Deronda Metz from the Salvation Army; ATD’s Bill Berry.

ATD donates $170,000 American Tire Distributors Inc. (ATD) recently donated $170,000 in gifts to three charities: Boundless Playgrounds, Second Harvest Food Bank of Metrolina, N.C., and The Salvation Army Center of Hope, N.C. The gifts were announced at the company’s 22nd annual ATD Charity Classic Golf Tournament, reports William “Bill” Berry, CEO and president.

TBC helps cancer patients At a recent race event, TBC Retail Group dedicated its Service Central racing efforts to Alex Scott, founder of Alex’s Lemonade Stand Foundation (ALSF). In addition to bringing 100 children and families to the Uni-Select Auto Parts NHRA Nationals at Maple Grove raceway, Mohnton, Pa., TBC Retail donated $181,129 to ALSF. Truck sales will stay strong Forecasts for both heavy-duty and medium-duty vehicles remained unchanged from September to October 2011, according to ACT Research Co. “Continued strength is being demonstrated in both the medium-duty and heavy-duty markets. Class 8 orders rose above expectations, while cancellations remained modest,” said Sam Kahan, ACT’s chief economist.

Right to Repair: 50,000 sign on The Right to Repair Coalition has gathered 50,000 signatures, a sooner-than-expected milestone in its effort to place its pro-consumer initiative on the 2012 ballot in Massachusetts. In addition to the rapid signature gathering, the Right to Repair coalition’s Facebook page continues to grow daily and now has 10,000 supporters.

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Michelin Man turns 113, joins Walk of Fame A stack of tires might be his only birthday suit, but the Michelin Man turned 113 Oct. 4, 2011. The globally recognized advertising icon is also joining the Madison Ave. N.Y., Advertising Walk of Fame.

Advertising Week’s Walk of Fame has inducted the Michelin Man as “Icon of the Year” in ceremonies at Times Center in New York City.

In 1894, the two founding brothers, Andre and Edouard Michelin, saw a stack of tires and noted that with arms “it would make a man.” Four years later, in 1898, The Michelin Man’s character was born, appearing in Michelin posters and representing the company.

Today, The Michelin Man — sometimes called “Bibendum” — is regarded as one of the most iconic symbols in the world.

“The Michelin Man is much more than an advertising icon,” says Don Byrd, vice president of marketing at Michelin North America Inc. “He has become a global symbol of safety because of his longevity, his visibility among different audiences and the values he represents.”

Goodyear extends NASCAR licensing five years Goodyear will continue to supply the exclusive tires used in NASCAR’s top three racing series. The Goodyear Tire & Rubber Co. and NASCAR have signed an extended agreement through 2017.

The agreement renews Goodyear as the “Exclusive Tire Supplier” of NASCAR’s Sprint Cup Series, the NASCAR Nationwide Series and the NASCAR Camping World Truck Series.

Goodyear says it has had an uninterrupted commitment to NASCAR since becoming a race tire supplier in the 1950s, making it one of the longest-running supply programs in any sport.

In addition, Goodyear has been the exclusive tire supplier for all three of the circuit’s top series since 1997.

“This extension is the continuation of a relationship between experts,” said Pierre Jambon, vice president of Goodyear’s off-highway business. “NASCAR is clearly the expert in stock car racing, and it has chosen Goodyear because of our expertise in delivering outstanding performance.”

For more information on Goodyear’s NASCAR involvement, see “(Motor) SPORTS marketing: Goodyear’s 59-year relationship with NASCAR increases brand loyalty and technology transfer” starting on page 28.

Tire Barn adds 32nd location in Fort Wayne Tire Barn Warehouse recently opened its 32nd outlet. It is the company’s second “Superstore” and fifth overall store in Fort Wayne, Ind. The company first entered the Fort Wayne market 23 years ago.

“Our three existing Fort Wayne Tire Barn Warehouse stores perform well as a result of the high level of customer service our great team of employees provides,” says Chief Operating Officer Eldon Riggs. “We thought it important to have a Superstore presence in this area to continue to provide all the quality services our customers expect from us.”

Tire Barn offers Michelin, BFGoodrich, Uniroyal, Goodyear, Toyo, Cooper, Dunlop, Bridgestone “and other brands of choice.” Like all Tire Barn locations, prices are all inclusive, with no surprise installation fees.

The Tire Barn Inc. chain, run by Everybody’s Oil Corp., was 37th on the Modern Tire Dealer 100 list in the July issue.

It has been a family-owned business for more than 80 years. It has stores in Indiana, Illinois and Tennessee.

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TBC, NHRA partner The TBC Retail Group has entered into a multi-year relationship with the National Hot Rod Association (NHRA). The TBC Retail Group also is the title rights sponsor of the Tire Kingdom NHRA Gatornationals at Gainesville (Fla.) Raceway, and has a strong presence along NHRA’s Nitro Alley at NHRA Full Throttle Drag Racing Series events.

Michelin optimizes consumer online shopping With a new individualized online experience, Michelin North American Inc. says it is changing the way consumers shop for tires. The company now offers a selection of digital tools to make the process of tire buying easier and more enjoyable.

“Consumers spend an average of 2.5 hours researching tires online, and many take much longer. Other online tire resources and tools aren’t going far enough to offer recommendations that are specific to individual driver priorities,” says Don Byrd, vice president of marketing at Michelin North America. “Developing useful tools and making our team of experts available enhances the tire-shopping experience, ultimately allowing our consumers to make more informed tire decisions.”

New tools include: Team Michelin Tire Selector Tool; Team Michelin Experts; User Tire Ratings and Reviews; Tires 101; and “Call Me Please.”

To try out the site or for more information, visit www.MichelinMan.com.

Radar hosts cancer awareness Radar Tires, the flagship tire brand of Singapore-based Omni United Pte. Ltd., is helping to find a cure for breast cancer. During Breast Cancer Awareness Month, the company hosted events at tire dealerships across the country in support of “Mobilizing Hope” — the brand’s partnership with The Breast Cancer Research Foundation.

Andreoli has new HQ Tire retail business management provider Andreoli & Associates Inc. (A&A) has moved to a new corporate headquarters. The new A&A corporate offices and technical support center is located in The Park, Huntersville, N.C. A&A’s datacenter hosting facilities located in Georgia and California remain unchanged.

Tireman opens 16th location Tireman Auto Service Centers has opened a new facility in Findlay, Ohio. “We’re looking forward to providing the top tire brands and a wide array of automotive services to the Findlay area,” said Randy Jones, president of Tireman Auto Service Centers.

Yokohama’s Orange Oil Tire Technology is now on display at the Museum of Science, Boston. The BluEarth-first technology is environmentally friendly.

Yokohama’s green tire exhibit opens in Boston Yokohama Tire Corp.’s eco-tire technology is now officially on display at the Museum of Science, Boston. The two-year exhibit showcases Yokohama’s BluEarth-1, the company’s latest orange oil-infused passenger car tire, as well as the ultra-thin AIRTEX Advanced Liner, which helps consumers cut fuel costs by keeping their tires properly inflated.

“Yokohama is the first — and only — tire manufacturer in the world to employ orange oil technology,” said Yasushi Tanaka, Yokohama president and CEO. “It’s very rewarding to see it highlighted in a leading educational and cultural institution like the Museum of Science, Boston. The exhibit validates our commitment to advanced technologies that will protect earth.”

The tire’s technology combines oil extracted from orange peels with fine silica and a blend polymer to form a nano-blend compound. This BluEarth-first technology, initially utilized in Yokohama’s dB Super E-spec tire, eliminates a significant amount of the petroleum-based products normally used in tire manufacturing.

Tire Group International partners with TRP Tire Group International Inc. (TGI) has partnered with Transportation Resource Partners (TRP) and the McLarty Companies.

“We have partnered with companies that share the very same ideals as part of their core and also share the vision for the growth of TGI,” said Tony Gonzalez, CEO of TGI. “TRP, with its close association with the Penske organization, and McLarty, are leaders in their industries and bring a vast amount of resources to our business.

Their expertise in distribution and building businesses both in the USA and Latin America will help TGI take the next step in its rapid growth.”

Tire Group International is a fast-growing company in the worldwide wholesale distribution of tires, and South Florida’s largest independent tire wholesaler.

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Love’s opens in Cottondale, Fla. Love’s Travel Stops has opened a new travel stop in Cottondale, Fla., at Interstate 10, Exit 130. The Cottondale Love’s features 98 truck spaces, DEF dispensers at the diesel islands, CAT scales, and other amenities. A Love’s Truck Tire Care center is located behind the travel stop. Love’s Truck Tire Care centers are open 24/7 and are equipped with state-of-the-art tools and equipment to meet truck care needs.

Michelin network grows The Michelin Commercial Service Network continues to expand, adding 200 locations to increase its coverage by nearly 70%. The network also has enhanced the Michelin ONCall Emergency Road Service (ERS), and will handle a projected 80% more events this year than it did in 2010. The network’s 1,700 TIA-trained technicians are focused on a roll time target of less than two hours for Michelin ONCall ERS. ‘Tire Answer Man’ debuts The Goodyear Tire and Rubber Co. has launched the fleetHQ “Ask the Tire Answer Man” blog at http://blog.fleethq.com. The blog gives fleets and owner-operators an opportunity to interact with Tim Miller, Goodyear’s “Tire Answer Man,” a 30-plus year commercial tire veteran.

Miller also serves as marketing communications manager for Goodyear’s commercial tire business.

ASA revamps website The Automotive Service Association (ASA) has unveiled a redesign of its website, www.ASAshop.org. The website now includes a reorganized format, with the major addition of the new Communities section with access to online forums, document libraries, wikis and blogs.

Continental adds to ranks Continental AG has significantly increased the recruitment of junior staff in this year, and expects to hire 5,500 graduates and young professionals worldwide by year-end. Of the 5,500 new recruits worldwide, 4,000 will fill engineering jobs and 1,500 commercial positions.

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From ninth place to first in just three years Consumer Reports praises Cooper light truck and SUV tire

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hen Consumer Reports first started rating all-terrain SUV and pickup truck tires in 2008, Cooper Tire & Rubber Co.’s entry was listed as the ninth best tire. Three years later, the company has the number one-ranked tire.

The Cooper Discoverer A/T3 finished first among 13 tire lines tested. All were described as having “more grip than all-season on snowy and unpaved roads.” The tire’s cost, $150, placed it squarely in the middle.

It was among five all-terrain tires that stood out, according to CR. The others, all of which tied for second place, were the Michelin LTX A/T2 ($180), Hankook Dynapro ATM ($175), Kumho Road Venture AT KL78 ($130) and Kumho Road Venture SAT KL61 ($139).

CR rated the Discoverer A/T3’s performance characteristics as follows: • “Excellent” for snow traction.

• “Very good” for dry braking, wet braking, hydroplaning resistance, ride comfort and tread life.

• “Good” for warm-weather handling and quiet ride.

The tire received “Fair” marks for ice braking performance and low rolling resistance.

It received no “Poor” marks.

In 2008, the Discoverer ATR was not a CR-recommended product, although it received an “Excellent” rating for its ability to resist hydroplaning. At that time, based on price and performance, CR recommended the Pirelli Scorpion ATR (which was the clear number one) and the Bridgestone Dueler A/T Revo.

“Over the last three or four years, we’ve spent a lot of time on materials technology, especially when it comes to new polymers and the utilization of silica. That has helped us optimize performance,” says Chuck Yurkovich, vice president of global technology. “Combined with our traditional speed to market, our focus on state-ofscience materials technology has resulted in us being able to compete very effectively with industry leaders.”

In this year’s all-season SUV and pickup truck category (defined as “best for pavement in most weather conditions”), four Michelin tires and the Continental CrossContact LX20 EcoPlus ($159) tied for first, based on points. The Michelin LTX M/S2 ($182), X Radial LT2 ($220) and Latitude Tour ($168) were singled out for their excellent tread life; the fourth Michelin tire was the Latitude Tour HP ($171).

CR complimented the Continental CrossContact LX20 EcoPlus and Michelin Latitude Tour for being “good for most weather conditions.”

In the winter SUV and pickup truck tire category (defined as “maximum traction on snow and ice”), the Continental ExtremeWinterContact and Nokian Hakkapeliitta R Sport Utility finished in a tie for first, followed by the General Altimax Arctic, Michelin Latitude X-Ice XI2 and Yokohama Geolander i/T G072. ■ The Discoverer A/T3 was described as “best overall, with long tread life.”

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Ludwig Report

With gas prices down and driving levels up, expect increased tire demand

T

his year has been characterized by soft retail demand, high tire prices forced by surging raw materials, poor fill rates early in the year and new leaders of North American operations at both Goodyear and Cooper Tire. In the last month, gasoline prices and raw materials have begun to come down, but all tire manufacturers instituted another round By Saul Ludwig of price hikes because they are still way behind covering costs. I expect this to be the last round of increases barring further raw material cost changes. With gas prices off sharply, driving levels, and even tire demand, should soon begin to improve. Looking longer term, there are currently 25 new tire plants under construction (40% of them in China) that will start to come on stream in 2012 and 2013. With tire demand growing sharply in China, the local market should consume much of that increased production.

Dealers

Profit margins improved in September

In comparing the month of September 2011 with August 2011, average costs for size 215/60R16 major brand tires were down 1% while selling prices were up 1%. Average costs for a 215/60R16 private brand tire were up 2% while selling prices were up roughly 3%.

Truck pricing seen as very firm

There was no uniformity in passenger tire dealer pricing as an equal number of respondents saw pricing as normal, aggressive and very firm. On the other hand, 64% of truck tire dealers saw pricing as very firm, as high demand for truck tires is causing manufacturers to discount sparingly.

Truck tire inventories slip

The survey indicated that 50% of passenger tire dealers believed inventories were in line with current business levels, with the remaining dealers equally split between viewing inventories as too high and too low for current

How dealers view their near-term business

Monthly survey

A number of independent tire dealers were surveyed concerning current business trends. Except for tire prices and costs, the results of the September 2011 survey are compared with those of September 2010.

Dealers are optimistic

MAY

JUN

JUL

AUG(R)

SEP(P)

SEP(09)

Passenger tire Will improve Will worsen Will stay level

45% 14% 41%

31% 6% 63%

23% 54% 23%

36% 18% 46%

50% 8% 42%

67% 0% 33%

Truck tire Will improve Will worsen Will stay level

56% 5% 31%

62% 0% 38%

50% 10% 40%

36% 9% 55%

45% 9% 46%

40% 0% 60%

R-Revised

P-Preliminary

According to our dealer survey, roughly 50% of passenger tire dealers believe business will improve over the next six months while 42% believe it will stay about the same. Eight percent believe business will worsen. As for truck tire dealers surveyed, 46% see business staying level while 45% see business improving. The other 9% expect business to worsen. Volumes held steady in September for a second straight month and margins improved slightly. This is giving dealers hope that the next six months may shape up to be pretty good.

Volumes hold steady for a second straight month

On average, retail sales of new replacement passenger tires were flat when compared with September 2010.

Many positives, such as lower gas prices and improving unemployment data, should begin to benefit tire volumes.

New truck tire sales continue to surge ahead, as volumes were up 5% while retreaded tire sales were up 4%.

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demand. Truck tire dealers indicated inventories slipped a bit, as 50% believed inventories were too low, compared to only 30% last month. Only 8% of truck tire dealers viewed inventories as too high, which is the lowest level seen since April. Truck tires have been in high demand all year, which is making it difficult for dealers to build inventories

Service business holds steady in September

Dealers who provide automotive service reported that 25% of revenues, on average, were generated by service during September. Dealers indicated that service business has been the key driving force behind their 2011 growth. â– Analyst Saul Ludwig is a managing director with Northcoast Research Holdings LLC based in Cleveland, Ohio. He concentrates on the tire and chemical industries. He has been writing for Modern Tire Dealer since April 1975.

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10/14/11 10:23:53 AM

Sports marketing

The sports marketing trend Baseball, football, basketball, even ultimate fighting promote tire brands to the masses

By Bob Ulrich

S

ports marketing is a numbers game. Hits on a webpage ad are more important than hits during a baseball or football game. Impressions and views count for more than outcome.

Looking back at the recently completed Major League Baseball season, four tire brands were featured in field-level, behind home plate signage, depending on which stadium you were in. As the “official tire of Major League Baseball,” Firestone could be seen in all 30 major league stadiums in some capacity.

“Sports reach a lot of people, but it also reaches a lot of eyeballs,” says Bill Barbera, senior vice president of sales for Van Wagner Sports Group. “And it’s global.” Barbera has worked with Hankook Tire America Corp. for 10 years.

“That board behind home plate can be sold by a local team, but if a game becomes a national broadcast, that becomes a national element that’s sold,” explains Phil Pacsi, vice president of consumer tire marketing in North America for Bridgestone Americas Tire Operations LLC. Hankook signage appeared in 22 of the 30 stadiums, including Citizens Bank Park, home of the Philadelphia Phillies.

Yokohama could be seen in Angel Stadium of Anaheim, home of the Los Angeles Angels, while Maxxis partnered with the New York Yankees.

The key to impressions is television coverage, not the head count. “Sports reach a lot of people, but it also reaches a lot of eyeballs,” says Bill Barbera, senior vice president of sales for Van Wagner Sports Group. “And it’s global.”

Barbera has worked with Hankook for 10 years. He says home plate signage puts advertising into the telecast, and helps the brand “become part of the game.”

Calvin Pak, general manager of Hankook’s marketing team,

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says the company has used sports marketing to increase brand awareness and build brand image. It tied this year’s involvement in baseball to two major consumer rebate and car giveaway promotions: “Great Catch” in the spring and “Great Hit” in the fall.

“Especially this year, I think we’ve received a lot of compliments from customers and dealers. One of the things we’re doing differently from previous years is leveraging and creating synergy.”

Maxxis International, based in Taiwan, and its United States subsidiary also have sponsored the Los Angeles Dodgers, Chicago White Sox, Atlanta Braves and Detroit Tigers in the past. “There’s talk about sponsoring the Yankees again next year,” says John Wu, assistant product manager for the Maxxis International—USA’s Automotive Tire Division. “They also are popular back home.”

Nitto Tire U.S.A. Inc. has been a Los Angeles Angels sponsor for two years. As part of that sponsorship, the brand appears in the Angels’ magazine and on the scoreboard behind home plate. This season, fans received plenty of swag: Nitto handed out commemorative T-shirts on opening day; “Eco Bags” filled with recycled products in May; and a drawstring backpack in July.

Baseball is one of many television-driven, non-racing sports with which tire manufacturers are aligned.

• Bridgestone Americas Tire Operations LLC, Kumho Tire U.S.A. Inc.: National Football League (NFL).

• Yokohama Tire Corp., Kumho: National Basketball Association (NBA).

• Continental Tire the Americas LLC, Kumho: Major League Soccer (MLS).

• Cooper Tire & Rubber Co., Toyo Tire U.S.A. Corp., Kumho, Continental: collegiate athletics.

• Bridgestone: National Hockey League (NHL), Professional Golfers Association (PGA).

• Toyo: Ultimate Fighting Championship.

Not everyone thinks sports marketing is an effective use of advertising dollars from tire manufacturers. “I still don’t see the value in what everyone’s calling sports marketing,” says Richard Smallwood, CEO and president of Falken Tire Corp.

“When we see the signage in the stadiums, it shows the brand, but not what the brand stands for. There is no emotional attachment or meaning assigned to the brand. The average American consumer is exposed to upwards of 3,000 brand messages a day.

How does that static sign set your brand apart from all of the other brand messages bombarding the consumer?

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“What does it mean? What is the brand value? That’s where we struggle with it,” he says. “We don’t see the value in it.”

Smallwood prefers motorsports, especially when his tire brand is competing against “the best in the world. Tires represent an interaction with the car, so there’s a lot of affiliation with them.”

In the American Le Mans Series GT Class, for example, Falken competes against Michelin, Dunlop and Yokohama.

Motorsports involvement certainly counts as sports marketing, although it’s a whole different animal. There’s Goodyear with NASCAR and Pirelli with Formula One. BFGoodrich and General are associated closely with Baja racing. And many other brands are known at the grassroots level.

(Although motorsports will not be covered in this story, an in-depth interview with Goodyear about its association with NASCAR can be found on pages 28-31.)

Signage is one thing. What about advertising on uniforms?

Soccer teams in Europe already sell it. Hats and shirts in golf have logos. Some NFL and NHL practice jerseys feature advertising.

Barbera thinks within 10 years, baseball will allow advertising on uniforms, although perhaps not to NASCAR specifications.

“It’s become more and more commonplace around the world.

It would be a tremendous revenue boon for the team.”

Bottom line, does it sell more tires for the company? Tires are sold, not purchased. Independent tire dealers directly affect the sale 85% of the time, so they have to be convinced more often than the tire buyer.

Ultimately, it’s all about making money, and perhaps raising market share in the process. The 2011 financial statements will be telling.

Here’s a recap of how tire manufacturers used different sports to promote their brands this year, as they appeared on our website, www.moderntiredealer.com. For a look at how retailers such as Belle Tire Distributors (check out the scoreboard on our cover) are involved in sports marketing, read “Play ball! Sports marketing and America’s pastime are no strangers to independent tire dealers” on the MTD website under the “Articles” channel and “Features” listing.

off any four Kumho brand tires as a special “ticket back” offer redeemable at any Dunn Tire location.

(On Aug. 31, Kumho announced another NFL sponsorship, this one with the New York Jets for the next two seasons.)

June 2: Kumho prepares to kick off soccer promotions Kumho is teaming up with Sullivan Tire Co. Inc. and former United States Men’s National Soccer Team player Alexi Lalas to promote “America SCORES New England.”

The tie to Lalas is appropriate for Kumho, because it also showcases its partnership with the U.S. men’s soccer team.

Kumho is not only the official tire of the men’s and women’s soccer teams, but also a sponsor of Major League Soccer.

SullivanTire, based in Norwell, Mass., runs 53 Sullivan Tire & Auto Service retail locations throughout New England.

Lalas will meet and greet soccer fans on Friday, June 3, from 4 p.m. to 6 p.m. at the Brockton, Mass., store.

On June 4, Kumho will launch its philanthropic social media campaign supporting America SCORES New England, a non-profit organization that empowers youth through

The U.S. Women’s National Soccer Team faced off against Japan at the Columbus (Ohio) Crew Stadium in an exhibition match on May 14, 2011. Kumho sponsors both the women’s and men’s national teams.

KUMHO

the unique combination of athletics, creative writing and service-learning.

June 30: Kumho adds Bills to sports marketing push Kumho is the official tire of the Buffalo Bills NFL team. Kumho recently announced the new partnership for the 2011-2012 season, which includes promotions with Dunn Tire LLC. As part of the agreement, Kumho will receive branding on the back of Buffalo Bills season tickets, season suite tickets, individual game tickets and online downloadable tickets.

Buffalo, N.Y.-based Dunn Tire will offer ticket holders $75

April 29: Kumho advances to the second round So far, so good for the NBA teams sponsored by Kumho. Both the two-time defending champion Los Angeles Lakers and Miami Heat advanced to the second round of the 2011 playoffs.

In Los Angeles on April 20th, nearly 19,000 fans showed up at the Staples Center to watch the home team defeat the New Orleans Hornets in game two of the series. Fans received a purple Lakers — and Kumho-branded — rally towel with a “Let’s Go” rally cry.

In addition to Kumho signage on the Jumbotron and the lower ring section of the stadium, there was a PA announcement during the game thanking Kumho Tire for providing the rally towels to the fans, and promoting a $100 rebate offer on a set of Ecsta LE Sport high performance tires.

Even the Laker Girls wore red, fitted Kumho branded shirts during a second-quarter routine.

“Kumho Tire U.S.A. has seen a very positive and dynamic impact come from our sports marketing endeavors,” says Rick Brennan, vice president of marketing. “Our brand awareness, enthusiasm and excitement have grown immensely amongst our employees, consumers and dealers by not only our prominent presence in various stadiums and arenas, but by the special focus and attention we pay to actually connecting with the fans and teams.”

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May 16: Yokohama becomes a Phillie phanatic Yokohama has added the Philadelphia Phillies to its lineup in 2011 (in April, the company announced it was helping the Los Angeles Angels celebrate their 50th anniversary).

The sponsorship agreement includes: • a combination of signage behind home plate and on the first and third base lines; Los Angeles Angels fans at the April 12 game • pre-game, post-game and against the Cleveland Indians received a fleece blanket. “Sports sponsorships offer incredible in-game spots on the Phillies brand visibility and are a great platform to proflagship radio station throughmote our line-up of tires,” says Shawn Denlein, out the season; and Yokohama’s director of consumer product sales.

• in-stadium displays and YOKOHAMA in-game announcements on the public “For us, sports marketing is an integrated address system and LED scoreboard. approach, not just a branding approach,” says Dan King, senior vice president of sales One of the promotions is the “Home and marketing. He adds that Yokohama Team Pride” program, which runs through focuses on regional promotions in order June 12. During the promotional period, to get its dealers involved. consumers can receive a free official replica Phillies jersey with the purchase of four YoOct. 03: Yokohama partners with the kohama tires from participating dealers.

New England Patriots Yokohama also partnered with two NBA The New England Patriots NFL team teams, the Boston Celtics and the Houston is now part of Yokohama’s roster of sports Rockets, during the 2010-2011 season. marketing partnerships. The company announced it is sponsoring the NFL’s three- HANKOOK time Super Bowl champion Patriots for the In 2010, Hankook signed marketing 2011 season. (Yokohama also sponsors the agreements with 11 Major League Baseball NFL’s Dallas Cowboys, Denver Broncos stadiums to show its name and logo on and Baltimore Ravens.) signage behind home plate. That number According to Shawn Denlein, Yokohama jumped to 22 stadiums this year. director of consumer product sales, the Hankook hasn’t made a final decision on Patriots’ sponsorship includes Yokohama’s its sports marketing plans for 2012. “We “Home Team Pride” program, Oct. 9-Nov. will probably build on the momentum,” 6. Consumers can receive a free $85 gift says Pak. card to the Patriot Pro Shop with the purchase of four Yokohama tires from Sept. 6: Hankook awards Ford Explorer participating local dealers. to contest winner As the Official Tire of the New England Teresa Holder of Jonesboro, Ind., is Patriots, Yokohama will receive media the winner of Hankook Tire America’s exposure including weekly in-game and Great Catch 2011 Ford Explorer Limited post-game television spots, features and Giveaway. The Great Catch giveaway had billboards on the weekly telecast, as well more than 44,000 entries submitted. as tickets and hospitality.

Soo II Lee, president of Hankook Tire “The Patriots have a huge, passionate America Corp., presented Holder with the fan base which, along with the ‘Home key to her new vehicle on-field before the Team Pride’ gift card promotion, will first pitch of the Detroit Tigers’ game versus help generate foot traffic in our dealers’ the Kansas City Royals at Comerica Park stores,” says Denlein. in Detroit, Mich, on Aug. 30, 2011.

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Sports marketing No purchase was necessary to enter the contest. Holder, 56, said she entered online and had never purchased Hankook tires. “I definitely know what kind of tires I’ll be buying from now on!” she said, adding she buys her tires from Tire Barn Warehouse in Marion, Ind. Following the pre-game presentation ceremony, Holder and her husband, Roger, joined Lee in a VIP suite to watch the game. She also received a signed baseball from Tigers right fielder Magglio Ordonez.

In addition to Major League Baseball, Maxxis International also sponsored signage at the Australian Open tennis tournament this year. The Maxxis logo could be seen at Centre Court in Rod Laver Arena.

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The Great Catch Mail-in Rebate program was available to consumers who purchased four select tires of any size between April 1 and June 30 from an authorized Hankook retailer. Hankook launched its Great Hit promotion Sept. 1.

Consumers who purchase four select tires through Nov. 30 with be eligible for a mail-in rebate of up to $80.

COOPER

“Cooper Tire understands that the typical sports fan provides a high visibility target for Cooper’s brand messages,” says Hal Gardner, vice president of marketing communications and market intelligence. “For example, our consumer research suggests that over half of all sports broadcast viewers are directly linked to replacement tire purchases, so it makes sense for Cooper to sponsor events such as the ABC/ESPN College Football Halftime Show to effectively reach this valuable consumer audience.

“Sports marketing also has potential to reach the enthusiast consumer demographic that typically is a strong supporter of Cooper’s light truck, SUV and UHP products, so the fit is a good one with respect to overall audience participation with our brand.”

Aug. 26: Cooper continues with halftime show Cooper Tire is staying active with the ABC College Football Halftime Show. For the fifth consecutive year, Cooper will sponsor the show’s “Saturday Afternoon Halftime Reports” on ABC.

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Sports marketing The show is a premier broadcast that brings viewers the latest collegiate scores, game previews and expert game analysis.

“This relationship brings together two iconic brands that stand for tradition, performance and the pursuit of excellence,” says Julie Smalstig, Cooper Tire’s consumer and channel marketing director. “This sponsorship also offers a meaningful opportunity for Cooper to continue enhancing its marketing support for our dealer network.”

According to the National Collegiate Athletic Association (NCAA), college football set a record for the number of people attending games last season. Close to 50 million fans turned out to watch NCAA football games. This represents an increase of more than 1.3 million fans, or nearly 3%, from the prior year. Cooper also will launch its consumer-driven Take the Money and Ride national rebate event (Aug. 25-Nov. 7, 2011) during the start of college football.

TOYO

“At Toyo Tires, we continually evaluate all of our marketing initiatives to ensure we are creating a positive ROI for the company and our dealers,” says Amy Coleman, senior director of marketing. “This includes our sponsorships and event support. “Whether it’s a motorsports event, a college

Reinforcing brand awareness Bridgestone promotes tires in major ways Being the “official tire” of a major sport is not enough, according to Phil Pacsi, vice president of consumer tire marketing in North America for Bridgestone Americas Tire Operations LLC. His sports marketing philosophy is to promote from within.

“You should promote within that particular sport. We don’t cover the entire season, but pick selected times during the season.”

Bridgestone is heavily involved in the NFL, NHL and PGA with its Bridgestone brand. In Major League Baseball and the IZOD IndyCar Series, Bridgestone promotes the Firestone brand.

“A lot of our spend is at the end of the year leading up to the Super Bowl and the Bridgestone Halftime Show, which is our crown jewel event,” says Pacsi. In addition to print, online and television advertising, the company gets its dealers involved as much as possible.

For Super Bowl XLV in Dallas, Texas, in 2011, Bridgestone dealers in the New Orleans, La., area got together and collectively promoted the brand. Pomp’s Tire Service in Green Bay, Wis., also took advantage of the “pass-through rights” negotiated by Bridgestone, allowing the dealership to use the Super Bowl logo.

Close to 111 million people tuned into the game, making Super Bowl XLV the most watched program in television history. Also, there were 103,219 people in attendance in Dallas — not counting the 5,000 people who paid $200 each to stand outside the stadium and watch the game on a giant TV screen.

To put that number in perspective, the population of the United States is 308.7 million people, based on the 2010 Census.

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Toyo sponsors a number of Pac-10 college sports, including basketball, football and track and field.

sports team, UFC or even an individual athlete, all of our sponsorships must align with our overall company goals and objectives. Our goals include growing consumer awareness, reinforcing our reputation as a premium tire brand and driving traffic to our dealers’ stores.”

May 10: Toyo sponsors Pac-10 Championships Building on a five-year relationship with the Pacific-10, or Pac-10, Conference, Toyo Tire U.S.A. is the presenting television sponsor of the 2011 Pac-10 Track & Field Championships.

In addition to the 2011 Pac-10 Track & Field Championships, Toyo sponsors Pac-10 basketball and football, and also the Pac-10 Scholar-Athlete of the Year. “The dedicated student-athletes of college sports exemplify the Toyo Tires mantra: ‘Driven to Perform,’” says Marty Furman, Toyo’s chief operating officer.

Jan. 18: Toyo to sponsor Ultimate Fighting Championship Toyo Tire U.S.A. is returning as a sponsor and official tire of the Ultimate Fighting Championship (UFC) for 2011.

The “Toyo Tires” name will once again adorn sides of “The Octagon” during six live UFC Pay-Per-View events. In addition, the Toyo Tires logo will be included on the canvas for select UFC Fight Night events broadcast on VERSUS and Spike TV. Toyo was the official tire of the UFC from 2006 to 2008.

UFC programming is broadcast in more than 145 countries and territories, reaching 354 million homes worldwide in 19 different languages.

CONTINENTAL

At the Continental dealer meeting earlier this year, Director of Marketing Travis Roffler told attendees the company was utilizing Major League Soccer and Grand-Am road racing to grow the Continental brand in the U.S. “A little over four million people attended Major League Soccer games last year, creating just over 68 million impressions with an on-site value of just over $10 million for the brand.

“If you just call up some consumer and say, ‘Name a tire brand,’ the average American consumer answers Continental tire only 5% of the time. The average MLS fan answers Continental tire more than three times that number. And among Grand-Am fans, 46% are aware of the Continental tire brand.” ■

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Sports marketing

(Motor)SPORTS marketing Goodyear’s 59-year relationship with NASCAR increases brand loyalty and technology transfer

By Bob Bissler

A

ny NASCAR fan knows. What’s the official tire of NASCAR? Goodyear. And it will remain that way at least for the next five years. In October 2011, Goodyear and NASCAR signed an extended agreement for Goodyear to continue as the exclusive tire used in NASCAR’s top three racing series for the next five years.

That’s good news for the Goodyear Tire & Rubber Co. But it’s also good news for any dealer who sells Goodyear’s G3 tires — Goodyear, Dunlop and Kelly.

“If we compare your average consumer versus somebody that identifies himself as a NASCAR fan, we get a lift in market share,” says Kris Kienzl, Goodyear’s NASCAR marketing manager.

“NASCAR fans come in to buy Goodyear Goodyear delivers all the tires used at tires, versus the avereach NASCAR race to tracks every week age consumer.” during the race season. The specially deAs the official tire of signed Goodyear “Support Our Troops” NASCAR, the Goodyear tires shown above were used at the Daytona International Speedway at the tire brand is exclusive for July 3, 2010, Coke Zero 400 race.

NASCAR’s top three series — the NASCAR Sprint Cup Series, the NASCAR Nationwide Series and the NASCAR Camping World Cup Series.

“We have a lot of operational commitment as the official tire,” says Kienzl. “We have a large group of racing engineers. They’re not only in Akron, Ohio, working on developing tires for NASCAR; they follow them to the track. They work with the teams and get a lot of data.

They get a lot of feedback so they can continuously use that information in future development.”

Goodyear doesn’t release specific numbers on how much the company spends to be the official tire of NASCAR. However, it is a significant investment.

Kienzl says the company’s market share data and sales volume figures do support the investment.

It looks like the relationship is paying off. According to the 2011 Modern Tire Dealer Facts Issue, the top brand in the U.S. consumer tire market in 2010 was Goodyear,

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with 17.6% of an industry total of 226.3 million units (Bridgestone was second at 17.3%, followed by Michelin at 16.8%). Goodyear also has the highest percentages of the U.S. replacement consumer tire brand shares.

Goodyear has 15% of passenger tires (based on 198.7 million units) and 12.5% of light truck tires (based on 27.6 million units).

Track to street

Better sales are only part of Goodyear’s motorsports marketing strategy. Consumers benefit as well. How? Track to street technology transfer. Kienzl explains that being involved in motorsports helps the company design better tires for consumers.

“Our tires are endemic and are used in the sport versus being a sponsor in the NFL, where we would just be a name,” says Kienzl.

“The development that our engineers do with NASCAR tires really trickles through all of our company.

There’s a lot of learning week-in and week-out as far as thinking about new technologies, bringing new technologies to market and taking some of those technologies from racing tires and transferring them over to consumer tires.”

According to Jim Davis, Goodyear’s public relations manager, many of the technologies that Goodyear uses in consumer products were first developed for racing.

This includes various tires reinforced with carbon fiber (the ultra-high performance Eagle ResponsEdge, for example) and DuPont Kevlar (the off-road Wrangler MT/R, for example).

In addition, a Goodyear innovation that crossed over from racing to street tires is run-flat technology.

In 1966, Goodyear developed an inner-liner for race tires to prevent race cars from decreased control after a sudden loss in tire pressure. The offspring of that was Goodyear’s RunOnFlat Technology used in some consumer tires.

Track to street technology transfer isn’t the only advantage for Goodyear. The tech transfer also goes from street to track.

“Goodyear developed a new rain tire for possible use in the NASCAR Nationwide Series,” explains Davis. “The tire could be used in wet track conditions at some road courses on the NASCAR Nationwide Series schedule. The race tire’s tread pattern is similar to that featured on the Goodyear Eagle F1 all-season high-performance tire for consumer use.”

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Sports marketing Marketing the NASCAR brand

Kienzl says NASCAR is the second-most popular sport on television in the United States. That’s a huge opportunity to reach a broad base of consumers. But NASCAR fans are no ordinary consumers.

“NASCAR fans are interested in technology,” says Kienzl.

“They tend to know a little more about cars. Their neighbors ask them for advice about cars and tires. From a marketing perspective, we want to grow Goodyear brand affinity and purchase intent — and market share in the end. Our research shows that NASCAR fans are very brand-loyal.”

Goodyear’s research also reveals that NASCAR brand loyalty benefits dealers.

When a NASCAR fan is shopping for tires and deciding what brand they intend to purchase, they are more likely than the average consumer to walk into a store with the Goodyear brand in mind. And, they don’t change their mind once they enter the store.

“That is very positive for Goodyear when they’re coming in predisposed to buy our brand,” says Kienzl. “It may be up to the guy behind the counter to help them with which Goodyear tire is right for them, but they are coming in predisposed because they want our brand. That is a good thing for our dealers selling Goodyear tires.”

Kienzl says that Goodyear’s team of sales representatives around the country run sales incentives for Goodyear dealers.

If a dealer wants to run a special NASCAR promotion, the

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How important are the following marketing attributes in your decision whether to do business with a tire supplier?

Motorsport activities

60

50

40

30

20

10

0

2% Very important

17% Important

54% Neutral

Source: Modern Tire Dealer survey.

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19% 7% Not Not very important important at all

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company will help them with ideas and provide them with promotional materials. They can provide dealers with NASCAR race tickets, garage passes and hospitality suite access.

“We have taken dealers on NASCAR garage tours and provided them with information about what Goodyear does at the track,” Kienzl explains. “Just reinforcing that knowledge helps better educate the people who are selling the tires.”

Another way Goodyear educates dealers and consumers is through national marketing campaigns.

The company launched its “More Driven” campaign earlier this year. Kienzl says the whole idea behind the campaign is that more experts choose Goodyear for its superior performance.

“The More Driven campaign absolutely has NASCAR integrated into it,” Kienzl says. “With our dealers, the more we integrate NASCAR and Goodyear brand loyalty, it will naturally trickle down to Goodyear dealers.” ■

Trackside tires The Goodyear Tire & Rubber Co. delivers all the tires required for every NASCAR race weekend. That includes not only the tires that will be used during the actual race, but also the tires NASCAR teams will need for testing, practice and qualifying.

NASCAR rules require teams to lease the tires from Goodyear, so they don’t own them.

“We used to sell the tires to the teams,” explains Kris Kienzl, Goodyear’s NASCAR marketing manager. “What would happen is you’d have a team with a lot of sponsor money like a Hendrick Motorsports. They would be able to buy tires and then go out and do their own testing and become even stronger. Then they’d get on the track and you’d have them versus a one-car team that just couldn’t afford to do their own testing. So NASCAR asked us to put together a leasing program to even-out the playing field.”

To further even-out the field, NASCAR also changed the rules to limit teams from performing their own tire tests. Today NASCAR teams, big and small, are more evenly matched.

NASCAR teams lease the tires from Goodyear at what Kienzl calls “the low, low price of $449 a tire.” After a tire is used, it is returned to Goodyear. What would happen if someone didn’t want to return a tire? NASCAR and Goodyear have a unique method of ensuring that all tires are returned.

“We actually have radio frequency identification (RFID) chips in those tires for tracking,” says Kienzl. “We check them out and check them in. So teams can’t leave — their hauler can’t drive away — until all the tires have been returned after the race. It’s a process that works very well and we’ve never lost a tire.”

Teams also are not allowed to keep the tires that are on the car when the race finishes. Goodyear provides temporary tires that are installed on each stock car so teams can put the vehicle back in the hauler. So what happens to all those used tires after the teams go home?

“We drill holes in the sides of them,” Kienzl reveals. “If anything were to happen to the tire — somehow somebody got their hands on one — it would be rendered useless.”

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UHP tires and wheels

Hot wheels, cool tires Photo courtesy of The Tire Rack

The market for UHP tires packaged with custom wheels evolves as OEMs offer more highperformance packages

By Bob Bissler

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here are two kinds of people who buy high-performance wheels and tires. One is looking to improve the appearance of their vehicle, or to customize it so they can stand out in a crowd. The other is doing something that will enhance the performance of the vehicle.

“To upgrade appearance, a lot of people will choose more aggressive looking tires and sportier looking wheels,” says John Rastetter, director of tire information services, The Tire Rack. “Wheels are very much a fashion and a function market.

Lighter-weight wheels can enhance a vehicle’s performance because it doesn’t take as much energy to make them go, make them stop or hold the road around a corner.”

Rastetter says that for people who want to enhance vehicle performance, the wheel itself in many cases is the first determining factor. Then they’ll add the tire to the package.

If their vehicle came with a passenger or a touring tire as original equipment, going to a high-performance or ultrahigh performance (UHP) tire can take them to a new level

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of responsiveness, cornering and stability. That makes the car more fun to drive. And this market is about fun.

“Cars are so much better today than they were last year or the year before,” says Greg Hathcock, president of Vogue Tyre. “Car manufacturers have done such a phenomenal job of building a great product; cars that are fun to drive, responsive and efficient. UHP tires really just accentuate all the great benefits of these new cars.”

As OEMs improve product offerings, many are getting in on the UHP tire/custom wheel act.

“From our perspective, the market is leveling off,” says Rastetter. “That’s partially because so many manufacturers are offering more options as original equipment. Today, if you buy a version of a vehicle that’s got a sport package or a performance package, the wheels and tires tend to be a very important part of that. A vehicle might come with a 17-, 18- or a 19-inch wheel and tire rim diameter that is used as part of a sport package. Camaros will go up to 20-inches from the

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UHP tires and wheels factory as part of their performance packages.” These more extreme performance packages appeal to a more extreme group of consumers. In addition to enjoying driving their cars on public streets, they will participate in autocross competitions or high-performance driver’s education events held at racetracks. Many belong to car clubs.

For these consumers, the wheels and tires help the vehicle maximize what its engine, suspension and brakes can do. For the aftermarket, if a car comes with 20-inch wheels, the consumer is less likely to want to further enhance them. Just a few short years ago, that same car might have come with 16- or 17-inch wheels.

“That is affecting our business,” says Rastetter. “We’re in the tire and wheel business. While many people will buy one set of aftermarket wheels for their car, throughout the life of the vehicle they’ll be buying several sets of tires.”

Vogue Tyre also offers tires and wheels packaged together.

Hathcock says that generally, these consumers want to go with plus-size applications. He says this is becoming more common because there are more cars coming from the factory with higher speed rated tires and lower aspect ratios.

“Custom wheels are still a niche,” he explains. “I would say that the percentage of those packages that can be characterized as UHP is growing, simply because OE applications that can be characterized as UHP are growing.”

Hathcock says if you talk to several different people you’ll get several different definitions of what UHP means. He says

that at Vogue, the perception of a UHP tire is anything V-speed rated and above. However, the definition keeps getting broader.

UHP tires used to be purely summer tires. Now there are UHP all-season tires, and also winter tires for UHP. “For the person who buys a vehicle that has the optional

Custom wheels are still a niche.

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custom wheels and UHP tires on it, if they live in the north, trying to get through winter with very low-profile, very wide large rim diameter tires can be more of a challenge,” explains Rastetter. “The person who has the vehicle in the north, that’s fully optioned from the factory, may have their UHP needs met, but they’ll come to us for a winter tire and wheel solution.”

As this segment evolves, tire and wheel suppliers must keep up. As they do, there is reason for optimism in this market.

“I think it’s still going to remain strong,” says Rastetter. “No matter where you have a vehicle and original equipment, there’s always going to be a group of enthusiastic drivers who want to personalize their vehicle, to make it theirs.”

“Projections for new car sales are getting better,” says Hathcock. “The average car on the road today is almost 11 years old. So there’s clearly pent-up demand for new cars with performance wheels. When exactly that demand hits the market remains to be seen.” ■

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Distribution channels

TCi: one company, two divisions Wholesale? Commercial? Each is a profit center

W

hat is TCi? As an independent tire dealership, it was known as Tire Centers Inc., or TCI with a capital “I.” When Michelin North America Inc. purchased it in 1999, it became a wholly-owned LLC with a small “i.” However, it is made up of two divisions with no ties to each other.

In addition to its Michelin, BFGoodrich, Uniroyal, Trivant and Riken brands, the wholesale division supplies Maxxis, Pirelli, Hankook and Goodride passenger and/or light truck

tires to independent retailers and car dealerships. “We have to compete against other price points,” says Jim Borkey, senior vice president of distribution.

The commercial division is a company-owned chain of 68 dealerships that offers the Michelin, BFGoodrich, Continental, General, GT Radial, Hankook, Roadlux, Sumitomo and Yokohama truck tire brands to fleets.

Sound confusing? It won’t be after you check out the TCi spider chart below. — Bob Ulrich

Guy Pekle oversees both of TCi’s divisions in Duncan, S.C., as CEO and president. He says neither is done growing.

“We are not an orphan, we are not independent. But we’re our own profit center.”

Guy Pekle

John McLeod (below left) is senior vice president of operations for the commercial division. Nate Kirian (right), is vice president of marketing for TCi.

“We are not standardized, but systematic.”

John McLeod

Independent members of the Michelin Commercial Service Network, the nationwide truck and OTR tire program launched by the Michelin Americas Truck Tires division, are: A&E Tire Inc. Allied Oil & Supply Inc. Bauer Built Inc. Broadway Motors Inc. Canyon Tire Sales Inc. Colony Tire Corp.

Highlands’ Tire & Service Jack’s Tire & Oil Love’s Travel Stops Meekhof Tire Sales & Service Inc.

New England Truck Tire Centers Inc. Ozarko Tire Centers Inc. Phelps Tire Co. Inc. Service Tire Truck Center Inc. Shrader Tire & Oil Inc. Snider Tire Inc. Strouhal Tire Recapping Ziegler Tire and Supply Co. Valley Tire Co. Inc.

The 68 Tire Centers outlets also are part of the network. Ten of them have Michelin Retread Technologies plants; seven repair OTR tires. “We want to have as little overlap as possible with members of the Michelin Commercial Service Network,” says Pekle.

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The 78 TCi distribution centers nationwide only wholesale consumer tires, says Jim Borkey (right), senior vice president of distribution.

The distribution center in Greer, S.C. (pictured) has more than 30,000 square feet of space.

TIPS stands for Tire Inventory and Purchasing System. It links TCi customers with the consumer tire distribution center in their respective areas. All TCi customers can not only look up and order tires in real time, but also maintain their own list of authorized users and retail pricing. “TIPS is also a selling tool,” says Pekle. It is designed to be displayed to the consumer. Future enhancements will include total TCi inventory count and customer website integration.

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Dealership branding

Making customer service part of your brand A logo is only half the battle. The author combines his training skills with the teachings from his favorite business book to help you sell more tires and service

I

t would be a gross exaggeration to say I’m an avid reader of anything outside the sports pages on the Web. For me to pick up a book and read it from cover to cover says a lot about the book, not to mention my interest on the subject.

Normally, I have little interest or time for books that promote business and marketing, or selfhelp books that have the proven By Kevin Rohlwing solutions to make me better at everything. Which means any business book that I have read more than once is a huge deal in my world.

About 10 years ago, I started taking an interest in branding and came across an excerpt in an airline magazine on the subject. It left me wanting more, so I wrote down the title and author and started looking for it at my local bookstores. I found it a short time later and couldn’t put it down once I started reading. Since then, I’ve bought copies to give to new employees.

When most people think of a brand, the image of a logo, name or symbol immediately comes to mind. You don’t need to see the silver letters “GM” on a field of blue to know what company it represents, nor do you need to explain the meaning of five interlocking, multi-colored circles with three on the top and two on the bottom. And while marketing experts spend millions of dollars creating brand identities that are easily recognizable by consumers, recognition is only half the battle.

This book goes beyond the old brand thinking of logos and tag lines to create a new definition that encompasses more than what you see and hear.

It taps into the feelings that are created by those identifiers so executives and managers can focus on the core values that matter to consumers.

The name of the book is “A New Brand World” by Scott Bedbury with Stephen Fenichell. Bedbury was the Nike marketing executive who guided the “Just Do It” campaign that catapulted the company from the number three athletic shoe manufacturer to the largest footwear and apparel company in the world. He also managed the marketing efforts for Starbucks in the late 1990s when the

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company expanded from the Seattle area to thousands of stores across the globe.

In his book, Bedbury chronicles his experience with both companies and uses it to teach valuable lessons regarding the evolution of the new brand world: “A brand is the sum of the good, the bad, the ugly, and the off-strategy. It is defined by your best product as well as your worst. ...It is defined by the accomplishments of your best employee — the shining star in the company who can do no wrong — as well as by the mishaps of the worst hire you ever made. It is also defined by your receptionist and the music your customers are subjected to when placed on hold... The brand is defined by derisory consumer comments overheard in the hallway or in a chat room on the Internet. Brands are sponges for content, for images, for fleeting feelings. They become psychological concepts held in the minds of the public, where they may stay forever. As such, you can’t entirely control a brand. At best you can only guide and influence it.”

While the impact of “Just Do It” on the growth of Nike is impressive, I believe Bedbury’s discussion on Starbucks is the most relatable to the tire industry. Tires, like coffee, are more or less commodities in the eyes of many consumers, so the success of Starbucks is all that more amazing when you consider the coffee market just 10 years ago. What’s even more impressive is the fact that Starbucks does not run commercials or print ads as part of its marketing.

Old-fashioned word-of-mouth advertising continues to be successful, in part because Bedbury helped Starbucks crack their brand’s genetic code: “Cracking your brand’s genetic code is not strictly about product, about the past, or even about things — it is about tapping into an essence and an ethos that defines who you are to the folks who matter: your core customers, your potential customers, and your employees.”

Let’s start with the core customers because they are the ones who matter the most. For Starbucks, the members of this group will travel miles out of their way with total disregard for time and fuel economy to get a cup of coffee.

They’ll use words like “consistency” and “quality” when rationalizing the extra effort it often takes to find a loca-

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tion. Of course, in order to maintain any level of excellence in thousands of stores, every employee must buy into the core values that their brand represents.

Starbucks took a commodity like a cup of coffee and its people turned it into an experience that includes high-quality, precision-brewed cups of coffee. It doesn’t matter where you go, the consistency of the product and the experience continues to result in extreme brand loyalty. This is exactly why Bedbury emphasizes the employees as part of the genetic code:

pecially rest rooms), then it truly becomes part of the brand, and customers will recognize that.

I believe once the smell of sanitized rest rooms, scented candles, fresh popcorn or cookies/coffee wears off, true customer service ultimately comes down to three key attributes: attitude, confidence and gratitude. They apply as much to your technicians as they do to your counter people, but we’ll start with how they can make a difference the minute the customer walks through the door.

“Though it is important to demonstrate consistency to the outside world that you know what your brand is about, ultimately it is even more important to first demonstrate this internally and continue to do so at every opportunity.”

1. Attitude: Once again, is it warm and welcoming or rushed and bothered? People need to feel that the people with whom they are talking are actually glad to see them. If the salesperson is busy, a simple acknowledgment that he is aware the customer is

Tire retailers can learn a lot from Starbucks.

Tires are a commodity just like coffee because many consumers see few ew differences between one brand and nd another or the company that installs it. Many of them are looking for the best price, just like it was in the old days of coffee. If the tire industry wants to charge a premium for installing the same tire as everyone else, then retailers must commit too a much higher level of customer mer service training in order for or it to become part of the brand.

It begins with the person who answers the phone. Is the voice pleasant, one that shows genuine appreciation the customer called? Or is it laced with indifference, one that says “I just want to transfer you as quickly as possible so you are no longer my problem”? In some cases, a cheerful introduction and the name of the person n who can help may be all that is required to put the he customer at ease.

And if the counter person is busy, a promise too call back within a set time frame is a great way to get your customer to leave a message — as opposed to a voicemail that, at least in the consumer’s mind, may never get returned.

Then when the salesperson follows through andd schedules an appointment, the tire buyer already will have ve increased expectations about the brand because the first impression will have been notably unlike his or her previouss experience with other companies.

As soon as a customer arrives at the location, another important message about the brand is communicated. Every impression influences customer loyalty, so housekeeping is a major factor in setting the tone that separates one retailer from another. When your store is clean the first time and every time after that, the repeat consumer sees that housekeeping is an important part of the culture. If the company has multiple stores and they all maintain the same level of cleanliness (es-

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Ti like coffee, are more Tires, or less commodities in the eyes eyyes of many consumers.

waiting is enough for most people. Positive employees who are generally in a good mood andd hhappy tto see customers t can bbuild ild th the ttype off bbrandd lloyalty lt that Starbucks continues to enjoy.

2. Confidence: Listening is a skill upon which almost all of us could improve. Customers must believe salespeople are truly interested in what they have to say. Then they can respond confidently with the perfect solution because they have the training to explain the features and benefits of each option.

3. Gratitude: Genuinely show you appreciate your customers’ business by telling them so, and making sure they

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Dealership branding understand your procedures and services. The goal here is to make the customer want to return for another transaction.

Finally, salespeople should ask their customers if they are happy with the level of service and explain the complaint resolution policy.

If there is no complaint resolution policy, then dissatisfied customers will just never come back. If I’m going to believe that customer service is part of someone’s brand, then the salesperson should ask me if I’m happy and let me know what I should do if I’m unhappy for any reason. When customers have the phone number of a manager or the owner, then they will believe that the company is serious about exceeding expectations (see sidebar on page 46).

But the customer service experience does not stop at the sales counter. Every technician in the shop must buy into the same concept of exceeding expectations no matter what rolls in the bay. Those attributes that must be inherent to the sales staff also need to be in place for the employees who have little to no contact with the customers. A good example of a company buying into an “exceeding expectations” philosophy is Mountain View Tire and Service Inc., which is known for providing the “WOW Experience.” (Read about Mountain

View’s CEO and President Nick Mitsos — MTD’s 2011 Tire Dealer of the Year — in the September issue of MTD.) 1. Focus on attitude: Do your technicians take the time to wipe off any excess oil under the car after an oil change, or just ignore it and let it drip on the customer’s garage floor? Do they take the time to make sure their hands and shoes are clean when they get in the vehicle? If he has a poor attitude, and fails to treat the customer’s vehicle like it’s his own, all the good will created by excellent phone skills and a clean, informative showroom can be undone in seconds.

I can tell you there is a quick-lube place around the corner from my house that will never get my business again because the technician didn’t wipe up the excess oil. It is convenient and the counter people are pleasant, but I will never go back because its technician didn’t care.

2. Focus on confidence: Every technician must believe he knows exactly what needs to be done and have access to the tools and training to make sure the service is performed correctly. Guessing and rigging are not part of the customer service “brand,” so training and proper equipment are necessities. Scratching the rim flanges on alloy wheels should never happen with modern day machines if the employees

If the salesperson is busy, a simple acknowledgment that he is aware the customer is waiting is enough for most people.

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Dealership branding know how to use them. If technicians don’t have the right equipment or training, they cannot be expected to have a lot of confidence in their work.

3. Focus on gratitude: There has to been a genuine sense of appreciation when technicians get the opportunity to work on someone’s vehicle. They must be conscious of every detail so a customer immediately recognizes that someone took great care of her car. Technicians, like salespeople, have to make sure they do everything they can to make the driver want to come back for needed service or preventive maintenance. I’m not talking about mints on the dashboard or personal notes — or maybe I am.

My golden rule of training always has been “to change behavior in a positive manner.” It doesn’t matter what type of training takes place, the goal should be to improve the level of performance so things get better.

All commercial tire dealers are required by law to provide training for every employee who handles an inflated truck tire, so many of them use TIA’s training program for OSHA compliance. But the progressive companies also will provide the same training to the sales and office personnel so they are familiar with the terminology and different types of fitments.

Those same employees would also receive extensive training

on how to answer the phone, ask for the sale, and resolve a conflict. They become confident in their ability to handle just about any situation because every person in the building has been trained in several different areas.

In case you haven’t noticed, the new car dealers and national automotive repair companies are spending millions to market the fact that they are in the tire business. There has never been more competition for the independent tire dealer, so companies that want to stay in business must be more aggressive in their approach to training.

When you cannot compete on price, there has to be something else to differentiate you from the big boys. Starbucks did it by combining high quality coffee with highly trained baristas in comfortable settings that create an atmosphere and an experience. And even while other retail cup of coffee companies have stepped up, Starbucks remains the gold standard because the core values of the company are communicated to the employees on a regular basis.

While I seriously doubt that the Starbucks crowd will ever show the same level of passion for tire and vehicle service, I know the tire industry can learn a lot from its example. The formula appears to be so simple that it could be copied by

Complaint resolution policies are nothing more than signs on the walls if nobody follows through and resolves the dispute.

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Dealership branding anyone, but there have been plenty of failed entrepreneurs who thought it would be easy to charge more for a better quality cup o’ joe. It also takes highly motivated and trained employees who understand that every detail plays a vital role in defining the brand to the customers.

Each of the three key attributes of customer service must be in place in order for them to translate to the brand. Attitude is everything, which means most people can spot an order taker or commission hound in seconds. The same can be said for confidence. Employees who are well trained don’t have to struggle with the answers, look it up or check with the manager.

They are sure of themselves and their recommendations because they truly understand what is best for that particular customer and vehicle. And since they regularly receive training on how to communicate with consumers, they have confidence in their ability to handle any potential objections.

I have to admit that gratitude training may be difficult to find. I’m not sure how you teach someone to be thankful that there is enough work to guarantee a regular paycheck. My guess is that some people are just born and raised in a way that makes them appreciative of everything they have. They understand how the world works, so it’s natural for them take pride in their work and their customers. I’ve always said that I can teach any employee to do just about any job, but I cannot teach them to care. And while complaint resolution policies and procedures are a great way to demonstrate a higher level of commitment to customer service, they are nothing more

than signs on the walls if nobody follows through and resolves the dispute.

I follow Chicago sports teams religiously (except the White Sox). Walter Payton is the greatest running back I’ve ever seen, but he didn’t win the Super Bowl until they gave him a passing game, a defense and “da Coach.” Michael Jordan the player probably wouldn’t have become “Air Jordan the brand” without Scottie Pippen and Phil Jackson.

Two young hockey players named Toews ( Jonathan) and Kane (Patrick) do not lead the Blackhawks to a Stanley Cup unless the entire organization buys into the concept of “One Goal” (winning the championship). And while the Cubs are fortunate to have an iconic landmark like Wrigley Field, the organization has wasted millions of dollars on talented players because talent doesn’t guarantee team leadership and chemistry, which has made it impossible to create a brand that puts the focus on winning championships.

Successful sports teams are no different than tire retailers in that regard. There must be a leader at the top who sets the tone for the entire company and holds everyone accountable.

Star employees must lead by example and inspire co-workers to raise the level of their games so the team can succeed.

Expectations must be clearly communicated and reinforced on a regular basis so all of the employees understand how they shape the genetic code for the brand with each work order. And finally, there must be constant training for every job description in order to create a culture where customer service is the top priority.

Starbucks turned a cup of coffee into an experience because every employee gets it. Tire retailers can use these same principles to distance themselves from the competition by making customer service part of their branding. ■ Kevin Rohlwing is senior vice president of training for the Tire Industry Association (TIA). He can be reached via email at krohlwing@tireindustry.org.

5 stats that will startle you Living up to expectations is not enough Why is exceeding a customer’s expectations so important?

Consider these statistics: • 86% of consumers quit doing business with a company because of a bad customer experience, up from 59% just four years ago. Source: Harris Interactive, Customer Experience Impact Report • 91% of unhappy customers will not willingly do business with your organization again. Source: Lee Resource Inc. • It takes 12 positive service experiences to make up for one negative experience. Source: “Understanding Customers” by Ruby Newell-Legner • For every customer complaint, there are 26 other customers who have remained silent. Source: Lee Resource Inc. • Happy customers who get their issues resolved each tell four to six people about their experience. Source: White House Office of Consumer Affairs, Washington, D.C.

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Business budget

Budgeting for success Think of a budget as a road map to profitability

By Norm Gaither

H

ard to believe it’s fall already and time to think about your 2012 business budget. Or are you one of those tire dealers who doesn’t do budgets?

Sadly, there are many dealers like that.

Budgeting may be the most important management exercise that every successful store owner does all year.

Without budgets, a business will be like a ship without a rudder. Budgets help all businesses stay on the course to better profitability. After all, isn’t this why we are in business?

Excuses, excuses, excuses

Many tire dealers ignore budgets because they don’t have the time to create them. Typically, store owners are working so hard “in” the business, they don’t make time to work “on” the business.

Many plan to ask their bookkeeper to throw one together if their banker asks if they have a budget. And many tire dealers who say they prepare a budget just copy last year’s numbers and hope to be able to beat them.

Either of these actions, of course, would be a wrong approach to preparing a successful budget for next year.

Think about it, all successful companies, large or small, do budgets. That’s why they are successful!

Simple steps to getting started

Maybe now you are starting to ask if a budget makes sense for your business. You’re wondering: • How do you start?

• How long will it take?

• Who should help?

• Should you involve your people?

• Where do you get the information to prepare a budget?

These are all good questions, so let’s try to answer them.

In order to get started, I suggest that you find a day or

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evening when you won’t be interrupted by phone calls, customers or employees. Budgeting requires you to be able to think about what you believe will happen to your business next year.

Another way to look at a budget is to think of it as a plan or a road map to your business success. You would not think of driving 800 miles without a map or GPS. Budgets are the same thing — they offer directions.

Step one: Start by getting last year’s financial statements by month.

Yes, I said by month. Some people do a budget showing the whole year in one column. While this is better than not doing a budget at all, it will not help you to compare your results by each month.

Now that you have last year’s profit and loss statement by month, I suggest that you start by trying to do a budget for January. The best way is to have your bookkeeper set up a spreadsheet inserting last year’s actual numbers (see Chart #1 on page 54).

Notice we have captured as much detail as possible so we can identify and manage any area that does not meet our budget forecasts. Now, ask your bookkeeper, store manager and anyone else who is in a management role with your company: What has happened to our company since last January?

• Is the economy still soft?

• Have we lost a large customer?

• Did we lose a valuable employee?

• Will the city be working on the street in front of our store?

• Did we gain a large customer?

• Has the employment rate improved?

• Do we have any new lines or services to offer?

All of these questions will impact what your revenue and profits will be for each month next year. Once you know all of the answers, you are ready to start to put the numbers

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Business budget on paper. Start with sales by category by putting down how much you will do in tires, labor, alignment, parts, oil, shop supplies and so on (see Chart #2 on page 56 ).

The natural instinct is for you to be aggressive since business has been slow and you want next year to be better. Resist this impulse, put down only the actual numbers you know you will do. Once you complete the sales part of the budget, then you insert the cost of each category. I strongly suggest that you do not show any payroll costs in any of these categories. Put all payroll costs in the section called payroll below the gross profit line. Now subtract the cost by category from sales by category and this, of course, will give you the gross profit by category. Complete the process by putting in the percentages by category. You then calculate the cost by category divided by the sales in that category to determine what the percent of cost is by product.

Finally, you do the same for gross profit by category down to the total. You now know how much gross profit you think you will make for January of next year. The secret, of course, is not to spend more than this amount.

Step two: Anticipate your expenses.

This step will make your accounting people uncomfortable!

I suggest you start by doing the payroll for the whole store by category. Again look at Chart #1 and see how we break out the payroll. Ask your bookkeeper to give you the weekly pay for each person with spiffs and bonuses plus the amount of

payroll taxes. I suggest that you use this number for your budget. Your current weekly payroll will give you an idea of how much payroll you are paying compared to the gross profit you expect for next year.

Now, instead of using the percent of sales compared to payroll, I highly recommend that you divide each payroll category by the total gross profit. Our goal for payroll divided by total gross profit is to be sure it never goes over 45%. If it is higher this will be an area that you will need to adjust so you can show higher profits.

Step three: Complete every other expense for the month.

I suggest using the most current information unless you know that a given expense will go up next year. For example, rent. If you are paying $8,000 per month but in June it will go to $8,500, then when you do June’s budget show the higher number. After all of the other expenses are posted, then you should get a total of all expenses without payroll. You should now subtract payroll and other expenses from total gross profit to see if you will make a profit for next January. Remember, January and February are usually the two worst months of the year, so don’t panic if you show a loss for these two months.

Step four: Repeat this process for each month for the rest of the year.

Once you have completed the budget for all 12 months, hopefully you will see a profit that satisfies you. If you see a budget that is not to your liking, then the budget is telling you to make changes or you could lose money next year. The good news is this is why we do budgets! The budget says if I continue with these sales and expenses for the next year I won’t like the results, so I have to make some changes.

Resist the temptation to increase sales to fix the problem.

Everyone thinks this is the way to do it. You may be able to increase labor rates, which will help, but don’t change your other sales forecast. I strongly suspect that if you and your team did a good job on forecasting sales and gross profit, the problem must be in expenses. No one, I repeat, no one, wants to reduce expenses, but this is the answer to success.

Maybe for the first time since you have been in business you are going to be forced to look at this problem: “I must cut my expenses.”

Step five: Look at payroll.

In my 30 years of consulting to the retail tire industry, I can tell you the problem is almost always in payroll. We seem to want to carry a lot of people to give good customer service even when we don’t have the sales to support them. In the current economic conditions in our industry, sales are very soft. So the questions are:

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Business budget • Can I afford all of these people?

• Can I afford all of this overtime?

• Can I, as an owner, afford to continue to take out this much salary from the company?

If your budget for next year is not showing the profits you want, it’s probably because your payroll is too high. Once you have determined that you can’t increase sales or gross profit, you must look at reducing payroll costs. If you compare your budget of payroll dollars divided by budget of gross profit

dollars and the number is higher than 50%, you have too much payroll. Start by trying to reduce overtime. If your payroll is still too high, you may have to reduce the number of employees.

Step six: Look at your other expenses.

You will find that if you examine each one separately, there is not a lot of room to reduce them. Rent is fixed, utilities are hard to reduce. And even if you get three quotes every year, as you should, it’s hard to get insurance rates any lower.

Are you spending too much on advertising? Are you getting the results from your current programs? Do you measure the results of each advertising and marketing program that you are paying for? Should you continue to be in the Yellow Pages? Is your website up-to-date and effective?

This is the one area that if you are not getting the sales results that you want, then spend less or spend this money on more effective programs.

Step seven: Compare next January actual results to your budget and prior year by month.

I believe that this is the only way for you to look at your profit and loss report each month.

Chart #3 (on page 58), shows last year’s results compared to your budget and finally this year’s results. Your current profit and loss statement may only show the current month and year to date. This is not enough information to run your business. Use Chart #3 every month and you will start to better understand your numbers.

Count your profits

Running a business is very hard, and making a profit is the most important thing in business. If you have never prepared a budget, now is the time to start. It may open your eyes to the potential of making more money just by changing little things in your business. It’s never too early to start making a budget. Start now and watch your profits grow. ■ Norm Gaither is president of Dealer Strategic Planning Inc. (DSP), a company that promotes “20 groups” in multiple industries. He is a well-known consultant in the automotive aftermarket and has owned his own firm since 1984.

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10/14/11 1:02:50 PM

Chart #1

Your tire store actual profit & loss for the year xxxx Sales: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total sales Cost of sales: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total costs Gross profit: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total gross profit Payroll: Store manager Counter Service manager Service technicians General service Owner Office Payroll taxes Total payroll Percent Other expenses: Advertising Bank charges Cash (over) short Computer costs Credit card Depreciation Donations Dues & subscriptions Employee benefits Interest Insurance Leases - equipment Leases - vehicles Office supplies Outside services Postage Professional fees Rent Repairs - equipment Repairs - building Security alarm Shop supplies Taxes Telephone Tools Training Trash Travel & entertainment Uniforms Utilities Vehicle 401(k) & pension Miscellaneous Total other Other inc. or expenses Net profit before taxes

54 MTD_48-59.indd 54

Jan.

Feb.

March

April

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Total

17,307 1,242 20,715 4,125 4,696 17,555 1,412 955 68,007

15,389 1,577 19,455 3,699 4,100 17,321 1,381 785 63,707

20,415 2,445 25,617 5,895 5,200 21,047 1,668 977 83,264

21,755 1,296 26,415 6,177 6,875 22,416 1,966 1,145 88,045

22,415 1,555 27,005 6,222 6,744 23,015 1,844 1,076 89,876

23,015 1,642 27,615 6,109 6,944 23,665 1,845 944 91,779

21,715 1,335 25,345 4,621 5,225 22,415 1,645 905 83,206

22,007 1,235 24,315 4,709 5,665 21,075 1,495 976 81,477

21,345 1,454 23,755 4,822 5,975 21,415 1,377 985 81,128

22,315 1,397 21,986 5,106 5,877 19,995 1,472 885 79,033

21,795 1,405 22,669 4,995 5,235 19,775 1,377 841 78,092

20,065 1,565 21,785 4,623 5,200 19,005 1,234 852 74,329

249,538 18,148 286,677 61,103 67,736 248,699 18,716 11,326 961,943

12,980 869 9,129 22,978

11,542 1,104 9,007 21,653

15,311 1,712 10,944 27,967

16,316 907 11,656 28,880

16,811 1,089 11,968 29,868

17,261 1,149 12,306 30,716

16,286 935 11,656 28,877

16,505 865 10,959 28,329

16,009 1,018 11,136 28,162

16,736 978 10,397 28,112

16,346 984 10,283 27,613

15,049 1,096 9,883 26,027

187,154 12,704 129,323 329,181

4,327 373 20,715 4,125 4,696 8,426 1,412 955 45,029

3,847 473 19,455 3,699 4,100 8,314 1,381 785 42,054

5,104 734 25,617 5,895 5,200 10,103 1,668 977 55,297

5,439 389 26,415 6,177 6,875 10,760 1,966 1,145 59,165

5,604 467 27,005 6,222 6,744 11,047 1,844 1,076 60,008

5,754 493 27,615 6,109 6,944 11,359 1,845 944 61,063

5,429 401 25,345 4,621 5,225 10,759 1,645 905 54,329

5,502 371 24,315 4,709 5,665 10,116 1,495 976 53,148

5,336 436 23,755 4,822 5,975 10,279 1,377 985 52,966

5,579 419 21,986 5,106 5,877 9,598 1,472 885 50,921

5,449 422 22,669 4,995 5,235 9,492 1,377 841 50,479

5,016 470 21,785 4,623 5,200 9,122 1,234 852 48,302

62,385 5,444 286,677 61,103 67,736 119,376 18,716 11,326 632,762

2,251 4,503 12,415 1,351 5,600 1,200 2,071 29,391 65.3%

2,103 4,205 10,455 1,262 5,600 1,200 1,877 26,702 63.5%

2,765 5,530 10,247 1,659 5,600 1,200 2,160 29,160 52.7%

2,958 5,917 10,566 1,775 5,600 1,200 2,241 30,257 51.1%

3,000 6,001 10,802 1,800 5,600 1,200 2,272 30,676 51.1%

3,053 6,106 11,046 1,832 5,600 1,200 2,307 31,144 51.0%

2,716 5,433 10,138 1,630 5,600 1,200 2,137 28,855 53.1%

2,657 5,315 9,726 1,594 5,600 1,200 2,087 28,180 53.0%

2,648 5,297 9,502 1,589 5,600 1,200 2,067 27,903 52.7%

2,546 5,092 8,794 1,528 5,600 1,200 1,981 26,741 52.5%

2,524 5,048 9,068 1,514 5,600 1,200 1,996 26,950 53.4%

2,415 4,830 8,714 1,449 5,600 1,200 1,937 26,145 54.1%

31,638 63,276 121,473 18,983 67,200 14,400 25,134 342,104

2,040 188 221 1,466 1,287 200 135 495 397 1,394 160 401 877 84 1,000 6,500 343 474 130 977 400 388 130 101 503 310 855 415 155 135 22,161 (6,524)

1,911 156 297 1,377 1,287 400 386 1,394 160 374 661 1,000 6,500 266 130 697 400 374 100 344 265 1,277 345 155 20,256 (4,904)

2,498 215 135 355 1,576 1,287 400 375 1,394 160 412 775 121 1,000 6,500 235 412 130 844 400 397 215 138 465 327 975 408 155 255 22,559 3,578

2,641 295 312 1,585 1,287 400 364 1,394 160 516 809 1,000 6,500 135 791 130 955 400 386 126 380 310 855 397 155 406 22,689 6,219

2,696 301 1,604 1,287 400 386 1,394 160 341 923 1,000 6,500 419 130 908 400 412 705 130 412 312 706 388 155 315 22,384 6,948

2,753 326 170 415 1,695 1,287 400 386 1,394 160 409 888 1,000 6,500 130 952 400 427 135 488 301 831 412 155 286 22,300 7,618

2,496 412 1,497 1,287 400 386 1,394 160 775 795 209 1,000 6,500 812 130 888 400 451 301 147 1,533 296 988 426 155 476 24,314 1,161

2,444 466 100 566 1,488 1,287 400 386 1,394 160 366 788 1,000 6,500 377 130 848 400 509 777 123 285 1,323 475 155 201 22,948 2,020

2,434 413 371 1,433 1,287 400 386 1,394 160 389 1,009 1,000 6,500 212 130 797 400 406 121 507 301 1,486 466 155 313 22,470 2,593

2,371 409 235 409 1,397 1,287 400 386 1,394 160 375 755 315 1,000 6,500 479 575 130 764 400 395 376 118 477 299 945 497 155 297 23,300 880

2,343 323 134 235 1,391 1,287 400 386 1,394 160 415 793 1,000 6,500 306 130 703 400 384 215 975 115 452 286 766 430 155 260 22,338 1,191

2,230 307 525 416 1,333 1,287 400 386 1,394 160 509 866 1,000 6,500 512 794 130 699 400 377 109 395 245 709 401 155 233 22,472 (315)

28,858 3,811 1,299 3,597 17,842 15,444 200 135 4,895 4,610 16,728 1,920 5,282 9,939 729 12,000 78,000 3,018 4,124 1,560 10,032 4,800 4,906 1,237 2,457 1,463 5,956 3,537 11,716 5,060 1,860 3,177 270,192 20,466

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10/14/11 1:03:01 PM

Chart #2

Your tire store budget for the year xxxx Sales: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total sales Cost of sales: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total costs Gross profit: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazard Other Total gross profit Payroll: Store manager Counter Service manager Service technicians General service Owner Office Payroll taxes Total payroll Other expenses: Advertising Bank charges Cash (over) short Computer costs Credit card Depreciation Donations Dues & subscriptions Employee benefits Interest Insurance Leases – equipment Leases – vehicles Office supplies Outside services Postage Professional fees Rent Repairs - equipment Repairs - building Security alarm Shop supplies Taxes Telephone Tools Training Trash Travel & entertainment Uniforms Utilities Vehicle 401(k) & pension Miscellaneous Total other Other inc. or expenses Net profit before taxes

56 MTD_48-59.indd 56

Last January

%

Budget

%

17,307 1,242 20,715 4,125 4,696 17,555 1,412 955 68,007

25.4% 1.8% 30.5% 6.1% 6.9% 25.8% 2.1% 1.4%

17,000 1,200 21,000 4,000 4,500 18,000 1,400 1,000 68,100

25.0% 1.8% 30.8% 5.9% 6.6% 26.4% 2.1% 1.5%

100.0%

12,980 869 9,129 22,978

75.0% 70.0%

4,327 373 20,715 4,125 4,696 8,426 1,412 955 45,029

25.0% 30.0% 100.0% 100.0% 100.0% 48.0% 100.0% 100.0%

100.0%

12,750 840 9,360 22,950

75.0% 70.0%

25.0% 30.0% 100.0% 100.0% 100.0% 48.0% 100.0% 100.0%

66.2%

4,250 360 21,000 4,000 4,500 8,640 1,400 1,000 45,150

2,251 4,503 12,415 1,351 5,600 1,200 2,071 29,391

5.0% 10.0% 0.0% 27.6% 3.0% 12.4% 2.7% 4.6% 65.3%

2,300 4,400 10,000 1,300 5,600 1,200 1,800 26,600

5.1% 9.7% 0.0% 22.1% 2.9% 12.4% 2.7% 4.0% 58.9%

2,040 188 221 exp.

1,287 200 135 495 397 1,394 160 401 877 84

3.0% 0.3% 0.0% 0.3% 1,466 1.9% 0.3% 0.2% 0.7% 0.6% 2.0% 0.2% 0.6% 1.3% 0.1% 1,000 9.6% 0.5% 0.7% 0.2% 1.4% 0.6% 0.6% 0.2% 0.0% 0.1% 0.7% 0.5% 1.3% 0.6% 0.2% 0.2% 32.6% 0.0% -9.6%

1,500 180 225 2.2% 1,300 135 495 373 1,400 160 0.0% 400 880 85 1.5% 6,800 200 200 130 900 400 400 125 100 250 300 910 425 155 150 21,163 (2,613)

2.2% 0.3% 0.0% 0.3% 1,585 1.9% 0.0% 0.2% 0.7% 0.5% 2.1% 0.2% 0.6% 1.3% 0.1% 1,000 10.0% 0.3% 0.3% 0.2% 1.3% 0.6% 0.6% 0.2% 0.0% 0.1% 0.4% 0.4% 1.3% 0.6% 0.2% 0.2% 31.1% 0.0% -3.8%

6,500 343 474 130 977 400 388 130 101 503 310 855 415 155 135 22,161 (6,524)

52.0%

33.8%

52.0%

33.7%

66.3%

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10/14/11 1:03:12 PM

Chart #3

Your tire store budget for the year Sales: Passsenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total sales Cost of sales: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total costs Gross profit: Passenger tires Other tires Mechanical labor Tire labor Alignments Parts sales Shop supplies Road hazzard Other Total gross profit Payroll: Store manager Counter Service manager Service technicians General service Owner Office Payroll taxes Total payroll Other expenses: Advertising Bank charges Cash (over) short Computer costs Credit card exp.

Depreciation Donations Dues & subscriptions Employee benefits Interest Insurance Leases - equipment Leases - vehicles Office supplies Outside services Postage Professional fees Rent Repairs - equipment Repairs - building Security alarm Shop supplies Taxes Telephone Tools Training Trash Travel & entertainment Uniforms Utilities Vehicle 401(k) & pension Miscellaneous Total other Other inc. or expenses Net profit before taxes

58 MTD_48-59.indd 58

Last January

%

Budget

%

This January

%

17,307 1,242 20,715 4,125 4,696 17,555 1,412 955 68,007

25.4% 1.8% 30.5% 6.1% 6.9% 25.8% 2.1% 1.4%

17,000 1,200 21,000 4,000 4,500 18,000 1,400 1,000 68,100

25.0% 1.8% 30.8% 5.9% 6.6% 26.4% 2.1% 1.5%

18,689 1,655 24,366 4,800 4,750 19,975 1,635 1,200 77,070

24.2% 2.1% 31.6% 6.2% 6.2% 25.9% 2.1% 1.6%

100.0%

12,980 869 9,129 22,978

75.0% 70.0%

4,327 373 20,715 4,125 4,696 8,426 1,412 955 45,029

25.0% 30.0% 100.0% 100.0% 100.0% 48.0% 100.0% 100.0%

100.0%

12,750 840 9,360 22,950

75.0% 70.0%

25.0% 30.0% 100.0% 100.0% 100.0% 48.0% 100.0% 100.0%

66.2%

4,250 360 21,000 4,000 4,500 8,640 1,400 1,000 45,150

2,251 4,503 12,415 1,351 5,600 1,200 2,071 29,391

5.0% 10.0% 0.0% 27.6% 3.0% 12.4% 2.7% 4.6% 65.3%

2,040 188 221 1,466 1,287 200 135 495 397 1,394 160 401 877 84 1,000 6,500 343 474 130 977 400 388 130 101 503 310 855 415 155 135 22,161 (6,524)

3.0% 0.3% 0.0% 0.3% 2.2% 1.9% 0.3% 0.2% 0.7% 0.6% 2.0% 0.2% 0.0% 0.6% 1.3% 0.1% 1.5% 9.6% 0.5% 0.7% 0.2% 1.4% 0.6% 0.6% 0.2% 0.0% 0.1% 0.7% 0.5% 1.3% 0.6% 0.2% 0.2% 32.6% 0.0% -9.6%

52.0%

33.8%

100.0%

14,017 1,159 9,988 25,163

75.0% 70.0%

25.0% 30.0% 100.0% 100.0% 100.0% 50.0% 100.0% 100.0%

66.3%

4,672 497 24,366 4,800 4,750 9,988 1,635 1,200 51,907

2,300 4,400 10,000 1,300 5,600 1,200 1,800 26,600

5.1% 9.7% 0.0% 22.1% 2.9% 12.4% 2.7% 4.0% 58.9%

2,395 4,200 11,375 1,300 5,600 1,200 1,972 28,042

4.6% 8.1% 0.0% 21.9% 2.5% 10.8% 2.3% 3.8% 54.0%

1,500 180 225 1,585 1,300 135 495 373 1,400 160 400 880 85 1,000 6,800 200 200 130 900 400 400 125 100 250 300 910 425 155 150 21,163 (2,613)

2.2% 0.3% 0.0% 0.3% 2.3% 1.9% 0.0% 0.2% 0.7% 0.5% 2.1% 0.2% 0.0% 0.6% 1.3% 0.1% 1.5% 10.0% 0.3% 0.3% 0.2% 1.3% 0.6% 0.6% 0.2% 0.0% 0.1% 0.4% 0.4% 1.3% 0.6% 0.2% 0.2% 31.1% 0.0% -3.8%

1,526 143 200 1,600 1,300 135 495 370 1,400 160 289 915 80 1,000 6,800 130 966 400 417 115 375 310 976 365 155 213 20,835

2.0% 0.2% 0.0% 0.3% 2.1% 1.7% 0.0% 0.2% 0.6% 0.5% 1.8% 0.2% 0.0% 0.4% 1.2% 0.1% 1.3% 8.8% 0.0% 0.0% 0.2% 1.3% 0.5% 0.5% 0.0% 0.0% 0.1% 0.5% 0.4% 1.3% 0.5% 0.2% 0.3% 27.0%

3,030

3.9%

52.0%

33.7%

50.0%

32.6%

67.4%

MTD November 2011 10/14/11 1:03:18 PM

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10/14/11 1:03:23 PM

TIA president

Larry Brandt: TIA must grow Keeping its members and the industry educated is another priority, says the incoming president

L

arry Brandt is a man who believes in education. As a college student, Brandt unloaded tires at a Minnesota warehouse on his summer break. He broke into the tire business full time in 1979 as a wholesale tire and antifreeze broker. In 1985 he merged that company with Tires Plus and he became the vice president of wholesale for the five-store company.

Brandt was named president of Tires Plus in 1995, a position he held until the company was sold to Morgan Tire & Auto in August of 2000. In the 15 years he was on

Larry Brandt (center), Dan Gullet (left) and former MTD Tire Dealer of the Year Tom Gegax ran Tires Plus in 1998.

the Tires Plus senior management team, the number of stores grew from five to 144. He was chairman of the Tire Alliance Groupe from 1998-2000, and is still a member.

In 2001 he started MSB Tires LLC with two former executives of Tires Plus, Dan Gullet and Tom Gegax (above). MSB operated seven Tires Plus licensees in Minnesota and Iowa until he sold that company to TBC Corp. in October 2010. He is currently president of the United Tire Group. He also started Brandt Marketing, a consulting company that helps tire dealers. He has a consulting agreement with Comdata Corp., which helps automotive fleet companies consolidate and control their fuel and maintenance.

As the Tire Industry Association’s (TIA) incoming president, he knows how important it is to stay educated in order to run a successful tire business. TIA represents all segments of the tire industry, and Brandt wants to help advance all of them.

Brandt has a unique perspective when it comes to running a tire business. He was president of Tires Plus when

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it was an independent retail chain. He remained involved when it became company-owned by Bridgestone Retail Operations LLC. He says there are not a lot of differences between running seven stores or 144 stores.

“Multi-store management always comes down to systems and people,” Brandt explains. “If an individual only had one store he would still have to have systems in place so the store could run efficiently when he wasn’t there. When you run a 144-store chain you have a lot of support people to do different functions such as marketing directors, trainers and purchasing agents.”

Brandt says smaller chain and individual store owners need to be aligned with strong suppliers that offer training and group discount programs for purchasing tires and parts. He believes that as a store owner, you need to be under some form of marketing umbrella.

“At corporate Tires Plus, before we sold, we were the umbrella,” he says. “As a licensee, we aligned ourselves under that same umbrella managed by Bridgestone/Firestone.

There are many umbrellas out there. I feel you need to be under one of them to be successful.”

MTD: You have a strong retail background. How does TIA address the needs of retailers?

Brandt: I think the most important need that we meet for retailers is in training and education. TIA released the updated Automotive Tire Service (ATS) program this year and also launched the new advanced tire pressure monitoring system (TPMS) Training Program. Both programs give technicians comprehensive training on passenger and light truck tire service including lifting, tire balancing, repairing, mounting/demounting/inflation, lug unit torque/clamping force and TPMS. We have also released the 2011 version of our widely successful TPMS relearn procedures, as well as OE and popular aftermarket replacement part numbers and torque specs. Retailers who use our training programs and resources can reduce their liability and gain a competitive advantage with a qualified workforce.

We also have a new health insurance program for tire dealers. We continue to offer liability and workers’ comp insurance programs through our endorsed member benefit programs.

MTD: What legislative issues will you and TIA focus on over the next 12 months?

Brandt: Our top issues will be to be selected for the National Highway Traffic Safety Administration (NHTSA) consumer education program. Other top issues are to

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TIA president make permanent the repeal of estate tax, and to repeal or lessen the burden on mandatory health insurance.

We plan to extend the work opportunity tax credit to returning vets and disadvantaged youths.

We also plan to push for the passage of H.R. 966 (the Lawsuit Abuse Reduction Act), to push for a five-year extension of the Federal Aid Highway Bill (with no motor fuel tax increases), and to oppose the privatization of highways, a national weight-distance tax, and any proposed increase of the FET on new truck tires.

We also want to repeal the retroactive liability provision of Superfund (which has tire dealers tied up in at least 31 states for proper disposal of tires, used oil, used batteries and filters). We want to repeal or end the Chinese tariffs. We have position papers on all of these issues. We also have initiated a state legislative/regulatory newsletter and will be more active and visible on that level.

feelings and concerns of manufacturers to SEMA’s board of directors. We will continue to work with SEMA to strengthen our partnership and ensure that the GTE will be the tire show for the industry.

For the next year, TIA President Larry Brandt will place an emphasis on education and training.

“Without trained employees, you cannot survive in the automotive service industry today.”

MTD: What has TIA done to improve the Global Tire Expo (GTE)?

Brandt: TIA has expanded the education track to include Green@Noon. We have held meetings with all the tire manufacturers regarding having a presence at the Specialty Equipment Market Association (SEMA) Show, and have relayed

MTD: Is overseeing the government-mandated national tire maintenance consumer education program still a priority?

Brandt: Our top legislative/regulatory goal is to have the National Training and Simulation Association (NTSA) outsource the tire consumer education program to TIA. We believe we are uniquely positioned with the tire manufacturers, retailers and consumers to make this a very meaningful and positive program.

MTD: How many members does TIA have? How many of those members are independent tire dealers?

Brandt: TIA has 5,595 members and approximately 80% are independent tire dealers (not a part of national chains).

MTD: As TIA president, what will be your agenda?

Brandt: In 2011 Mike Berra Jr. and myself started to transition TIA into an association that could not only survive but grow in the future. The association picture has changed in the recent economic downturn and I’m pleased to say that TIA is in a strong position now for the future, and is ready to grow and prosper. I plan to continue this transition and make TIA an even stronger association in the future.

In my view, TIA is about training and government affairs.

We have an excellent training team led by Kevin Rohlwing and we need to capitalize more on that team. TIA needs to be the training center for all types of tires — and we will be.

There have never been more political issues that could affect the independent tire dealer than what is currently going on in Washington, D.C. TIA is extremely blessed to have an individual like Roy Littlefield to represent and lead our independent tire dealer needs. We will be communicating what’s going on in Washington and how it could affect dealers’ business more than ever before.

MTD: If you could accomplish one thing as TIA president, what would it be?

Brandt: Once I became a member of the TIA board, I was amazed that there wasn’t a better relationship between TIA and the Rubber Manufacturers Association (RMA). The two probably agree on 90% of the issues facing our industry today. We need to be talking to each other more. When there is common ground, we need to have the industry speak with one voice. When we don’t agree, we respectfully agree to disagree. ■

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TPMS

Special tools needed for the Audi Q7 New or relocated tire(s) must be initialized.

SUBJECT VEHICLE: 2010 Audi Q7.

SPECIAL TOOLS NEEDED? Yes, a torque wrench (V.A.G. 1410), and socket (V.A.G. 1410/1).

If a wheel sensor of the tire pressure monitoring system (TPMS) on the 2010 Audi Q7 senses a significant loss of air pressure in one or more tires, the sensor(s) sends signals (values) to the tire pressure monitoring antenna. The antenna transfers the values to the tire pressure control module.

The control module then transfers the values to the driver information system in the instrument cluster. Then it displays a flat tire symbol and the text message “CHECK TIRE PRESSURE.” After a few seconds, the message is replaced by the regular display; press the “CHECK” button to show the message again. If tire pressure is significantly different in one or more tires, check the tire(s) for damage or foreign objects.

Replace the tire(s) if necessary.

The low pressure warning light in the instrument cluster illuminates when: • Tire pressure is 7 psi (48 kPa) lower than it should be; • Wheel(s) are installed without a tire pressure sensor;

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• Winter tires are installed; • Incorrect pressure sensors are installed.

To remove an old sensor, follow these steps.

1. Remove tire and wheel assembly from the vehicle.

2. Demount the Figure 1 tire from the wheel following the tire changer manufacturer’s instructions while paying special attention to the following to avoid damaging the pressure sensor: a. Press the tire off both rim edges on the opposite side to the metal valve. b. Turn the wheel on the tire mounting equipment so that the valve/tire pressure sensor is opposite the mounting head.

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NOTE: To perform this procedure, a torque wrench (V.A.G. 1410) and socket (V.A.G. 1410/1) are required.

3. To remove the Beru System tire pressure sensors: a. While holding the tire pressure sensor against the wheel rim, remove the torx fastener. See Figure. 2. b. While counterholding the metal valve body, remove union nut and metal valve. See Figure 3. c. Remove and discard the valve insert from the valve stem.

To install a new sensor, follow these steps.

NOTE: When reusing Figure 2 tire pressure sensors, inspect the connection between the sensor and the metal valve for damage. It is also necessary to replace the valve nut, nickelplated valve insert, sealing ring, sealing washer and valve cap when reusing tire pressure sensors. See Figure 1.

1. To install Beru System tire pressure sensors: Figure 3 a. Install the metal valve body, and while counter-holding the valve (for example, 2 mm twist drill or counter holding tool — see Figure 1 and Figure 3), tighten the union nut to specification. b. Press and hold the tire pressure sensor against the wheel rim and tighten the torx fastener to specification. See Figure 2.

2. Mount the tire on the wheel following the tire changer manufacturer’s instructions, paying special attention to the following to avoid damaging the tire pressure sensor: a. Make sure that the tire does not contact the tire pressure sensor while mounting the tire. b. Turn the wheel on the tire mounting equipment so that the valve/tire pressure sensor is opposite the mounting head.

3. Install the tire and wheel assembly to the vehicle.

4. Adjust the inflation pressures of all tires (including spare tire), and balance the tires. Store the new tire pressures in the system. NOTE: Whenever tire pressure is adjusted, the adjusted pressure has to be stored again. If a tire was changed or relocated, the new or relocated

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tire(s) must be initialized. Check and correct the tire inflation pressures of the wheels on the vehicle as provided on the tire pressure label. After properly inflating the tires, current pressures have to be stored in the monitoring system. The system then implements an automatic adaptation process.

When a tire pressure monitoring system malfunction occurs, it will be indicated when the ignition is turned ON and the yellow malfunction lamp in the instrument cluster will flash for one minute and then stay ON. The yellow malfunction lamp cannot be switched OFF by pressing the multimedia system control button on the center console. This could be caused by the following: • If this symbol is displayed at the end of a learning phase, it means that the system cannot recognize which wheels are mounted on the vehicle. This may be because one or more wheels were mounted lacking a wheel sensor.

• A wheel sensor or other component may have failed.

• The system recognizes more than four wheels are present on the vehicle (i.e., when additional winter tires are being transported on the vehicle and are transmitting data).

• A wheel was changed, and the new tire was not initialized.

• If the vehicle is being operated with snow chains, system function can be affected by the shielding effect of the chains.

• The system is not available due to a malfunction.

• Other transmitting devices with the same frequency are emitting an electromagnetic field which can cause temporary interference in the system.

To store tire inflation pressures, follow these steps .

1. Adjust air pressure in all tires to specifications (as provided on the vehicle’s tire pressure label).

2. Turn the ignition on.

3. Select “CAR,” “SYSTEMS,” and “TIRE PRESSURES MONITORING.” 4. Press the multimedia control button on the center console when in the Tire Pressure Monitoring menu.

5. The new pressures will be saved when the vehicle is driven. ■ Information for this column comes from Mitchell 1’s ”Tire Pressure Monitoring Systems Guide” for domestic and import vehicles through 2010. Headquartered in Poway, Calif., Mitchell 1 has provided quality repair information solutions to the automotive industry for more than 80 years. For more information, visit www.mitchell1.com.

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Counter intelligence

‘I have to think about it’ Countering these dreaded words at the sales counter

I

have to think about it” is only six words, but it says a lot — or not.

We used to say at the sales counter, “Get the greenbacks, not the comebacks.” Of course, money in the cash drawer is always better than a promise.

No matter how good your sales presentation, your listening skills, your reputation, sooner or later every sales person will hear By Wayne Williams these dreaded words, “I have to think about it.” Because “I have to think about it” is vague, it can mean a variety of different things. It can mean “No”; it can mean “I’m not comfortable”; it can be a stall tactic.

Whatever it is, it’s not clear, and to get the necessary clarity, it’s going to require more effort to discover the real reason behind the objection.

Your prospective customer is attempting to close the door on your presentation, and you must, in effect, put your foot in the door. It’s awkward at best, and traditional techniques for overcoming objections just don’t work.

which is a point you and the prospect can both agree on.

Agreement, of course, is important. Depending on the response you receive, you may want to ask more direct questions. “Is my price too high?” “Were you looking for a lower-priced product?” “You don’t have the time to get the service now?” Is there anything I can do to help you make up your mind?” These types of direct questions require direct answers that will give you the insights you need to either press on or back off.

Handling emotions

Remember that you are never in complete control of the sales process because a lot of what’s taking place in the exchange is emotional. Emotion plays a part in everyone’s decision process. I suggest that you may attempt to personalize the conversation with “you” words rather than “I” words.

“If you have the work done now, you’ll drive away safer and you’ll find that blah-blah-blah,” or “If you schedule an appointment now for tomorrow, we can give you a ride to work and pick you up, if necessary,” or, “You’ll enjoy more peace of mind if you get this taken care of now.”

All of these comments, and a million others like them, help express concern for the prospect and your desire to help. One of my favorite sales techniques for showing or demonstrating empathy is the “feel-felt-and found” method.

It goes something like this, “I know how you feel. I’ve felt the same way, but let me tell you what I’ve found.”

In the case of Mr./Mrs. I-have-to-think-about-it, it sounds Find the common ground like this, “I know how you feel. $750 is a lot of money for The primary reason this scenario is so awkward is two tires and an alignment. I felt the same way a couple because you know that your next words will determine of months ago when I had to replace all four of my tires. if you’ll ever see that customer in your store What I found is the family again. Too much pressure and they are gone van rides much nicer and forever. The “just-right words” may salvage a my wife is much happier. sale either now or later.

I had to do it.”

Either way, you must find common ground!

Any way you choose, Remember, you’re not the only one feeling a the key, as always, is trust. little awkward, and it’s your job to control the A sincere and concerned conversation, to strengthen the trust required approach that is followed to make the sale now or at a later date. If at all by more sincere concern possible, you never want to end awkwardly. will help when your Common ground is found initially by asking The feel-felt-found sales technique shows prospect requires more for a few more moments of the prospect’s time. you empathize with your customer. time or more convincThen you must reiterate important points in ing. When addressing or the original dialog, attempting to establish or re-establish re-addressing the prospect’s need to “think about it,” don’t a deeper level of trust that will facilitate your prospective be defensive, be more helpful, be more empathetic. Listen customer to reveal the true nature of his/her objection, more carefully, and be attentive to body language. ■ remembering that some customers do just have to think about it.

Wayne Williams is president of ExSell Marketing Inc., a Common ground is found by re-focusing on the prospect’s “counter intelligence” firm based in La Habra, Calif. He can needs. This works because the needs have not changed, be reached at exsellmkting@gmail.com.

Emotion plays a part in everyone’s decision process.

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Business insight

Mobile barcodes: What’s with all the little boxes?

Tag code uses appear endless and are limited only by your imagination

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obile tagging is the process of providing data read from tags for display on mobile devices (source: Wikipedia). These are commonly encoded in a two-dimensional barcode and use the camera of a cell phone as the reader device. The content of the tag code is usually a URL for information that is addressed and accessible through the Internet.

There are dozens of different 2D By Wayne Croswell barcode standards. However, there are approximately 12 that are popular today with mobile phone users. The common ones used for mobile tagging today are listed in the chart on page 70. In addition, Microsoft has developed their own proprietary tag identified by small multi-colored triangles.

Do you use mobile barcodes? You may have noticed that they are popping up everywhere. You almost need a smartphone to read your favorite magazine these days. Every ad and article seems to have a mobile barcode printed next to it. Take a walk down Main Street, USA and you will find mobile barcodes in many storefront windows. Stroll through a shopping mall and you will find them in store entry ways and throughout store shelves everywhere.

Setting the standard

QR-Codes seem to be the most popular. They are square diagrams that look like they are comprised of many small little boxes. They have slightly larger solid boxes in three of the corners — it almost looks like a maze.

To read them, you need to download an app on your smartphone, and most of the QR code-reader apps are free. Some of the popular ones are RedLaser from Occipital, Scan from QR Code City, QR Reader from TapMedia, LTD, Nokia Reader from Nokia, and i-nigma Reader from i-nigma.

For you, it’s not important which reader is used, except for the fact that most readers can only read one type of code, their own.

There are some open-source readers available that can read more than one code standard, and many smartphone users have already figured out how to use them.

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Microsoft has its own propietary tag (right) that connects customers to its website.

Getting started

What’s really important is what these mobile barcodes can do for you and how you can use them in your business.

To use them to your advantage, you need to be able to create them. There are many free, and not-so-free, mobile barcode generators; most people prefer the free ones.

The generators are the software tools that create those cute little icons. Once you decide which standard you want to use, you can easily download an app that creates the 2D mobile barcodes and you can start creating them. When you create a mobile barcode image, it is saved as a graphic file, like a .gif, .jpeg, or .png file. You can attach the file to emails or upload them to a website just like any other graphic image.

You can also use them in print to include them on letterhead, invoices, window displays, billboards, advertisements, mailings, counter posters, showroom posters, and business cards. The list is endless; I think you get the point.

Smartphone users can take a photo of the barcode image and be connected directly to your website.

Now what?

What information can you put in these mobile barcodes?

Lots of things, and this is where the marketer in you should be getting excited.

You can encode something as simple as a phone number, or a website address. Or you can get fancy and include a specific website landing page, an SMS (text) message, an email message, contact details (such as a Vcard), an event that is automatically entered into an electronic calendar, a Google maps location, a social media launch, a link to a YouTube video – again, the list is endless.

You will be amazed at the information you can share with customers by using mobile barcodes, and at just how powerful

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Business insight

There are dozens of different 2D barcode standards. Here are the common ones used for mobile tagging today.

they can be. Here’s a great example, you can create a mobile barcode that will compose text message on a phone and send it. All the user has to do is scan the mobile barcode with their smartphone and press send, and off goes the text message sharing your business information with a “friend.” That is social media

marketing at its finest – instant sharing of information!

These barcodes also can initiate a text message and send it directly to the user.

When scanned, the user will receive a text message in their inbox reminding them about your business or even offering them a discount for repeat business.

Mobile barcodes can also contain links to a webpage that provides extensive information about products or processes.

They can even link to a video that explains a safety feature, or shows the reasons that certain services need to be performed, like the importance of tire rotations.

I found one of these codes in a magazine ad recently. The advertisement had several pictures of clothes and accessories and a model was pictured standing right in the middle of the ad. Once I scanned the code, the model’s image appeared on the screen of my phone. It then allowed me to drag the various outfits and accessories toward the model; as I did this, the items would instantly appear on the model on the screen of my phone. How cool is that?

Imagine doing that with a car, some tires, and wheels. Even cooler.

Think of the possibilities!

Now it’s time to get creative; imagine what you can do with these little boxes!

You can put them on tires and other products in your showroom. When scanned, they could direct the customer to a video that describes the tire, explains its features and benefits, and even gives pricing information. You can put a barcode in your showroom window, or on the showroom

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wall, that invites users to a website and allows them to join your online loyalty club – or sends them a text message to remind them to sign up.

You can include these barcodes in your print ads to direct customers to your website, or to a video that promotes this week’s specials or even an upcoming event. Imagine putting one on a billboard.

People passing by the billboard can use their smartphone to read the mobile barcode and get information about your business while on the road. The possibilities are endless and only limited by your imagination.

I think one of the most purposeful uses for a tire dealer is putting links to videos or webpages that give customers more information about what you are promoting. This isn’t something you could do easily before the invention of mobile barcodes.

What’ll they think of next? ■ As CEO and president of WECnology LLC (www.wecnology.com), Wayne Croswell is a “complimentary technology advisor” for independent tire dealers. Croswell can be reached at wcroswell@wecnology.com or (603) 249-5530.

This QR code will direct your mobile device to MTD’s website.

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Business insight

Plans are nothing without actions SalesMinded dealers know that real change is the key to execution

By Doug Trenary

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any years ago, I read a cover article in Fortune magazine titled, “Why do companies fail?”

The article had huge depth of research and many examples — and these examples of companies who went by the wayside in some cases were titans at the time like Eastern Airlines — remember them? The organizations noted covered many different industries and even different time frames and economic conditions at the respective time.

The moral to the article: All of these companies had very detailed plans on how to operate and press forward. What did they all lack? Execution of their own plan.

What about your tire dealership? Do you have game plan? I know you do or you wouldn’t be in operation.

And you might be very successful. Do you as an owner or manager feel good after each team meeting that the key issues for operations, sales and service got up onto the table? Do you spend money on training and then hope the training gets put into action? Do you have store

or division managers and associates that nod their head in agreement when asked to do something new but they won’t do it? Are your sales, service efforts, collections and profits suffering because they won’t?

If you answered “yes” to any of these questions, you’re in common company – you notice I didn’t say good company — because it’s not a good condition. But it is a common condition — a common and very costly problem.

What’s the problem? Very simply, human beings resist change. Yet change is the key ingredient needed to raise the bar, to lead at new levels, to gain new skills, and to sell more tires, add-ons and service in this tight economy. Even more specifically, it is personal change in one person — one of your employees at a time, that makes all the difference.

So what can you do as a leader? Let’s start with defining the challenge.

Challenge: Lack of execution, taking action and following through because an employee does not want to change to do the new behavior.

I see this all the time with tire dealers. A manager is fired up after a training or coaching session — they’re loaded with new sales knowledge or how to more effectively communicate with their team. They agree in a meeting to tighten their follow-up and hold their store team associates more accountable. But the test comes in a couple weeks — maybe 30 days — after these commitments. All you have to do is ask them, “How are the changes you agreed to make coming? How are they working with your store?”

Then comes the answer: “Well, I got so busy, I haven’t been able to do that yet... but I will though when things slow down and I can get my head above water.” Slow down?

Who wants their retail dealership or commercial operation to slow down? I’m sure you don’t.

Solution: Applying behavior-change support, follow-up and accountability.

What’s the cost to you of having an employee who won’t change?

Now, these recommendations can get testy. They are not easy. You may face resistance by any given employee — but you may not. You have to have a mind set of risk aversion (the cost to you of not having an employee make real changes) and say to yourself as a leader: “I must assume Bart is not going to change — even though he committed to. This is just the way most people are. So I have to stay with him closely for a few weeks to make sure he takes action on his new plan. And I need to make sure he gets

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going on what he understands he needs to do that is new for him. Our store needs the new Bart, not the old Bart.” Here are some concrete actions you can employ to help any one of your team members change behavior and execute the plans you have in place.

SalesMind principles applied: The learning keys in play are clarifying the absolute necessity of change, clearly defining the new actions expected, and then holding an employee accountable very quickly to begin those new actions: • Clarity: SalesMinds know that plans are nothing without action — they have no effect on tire sales, leading people or productivity.

You must define on paper, in the open, and with given employees in personal counsel with them what it is you want them to change now. Plus get buy-in and ideas from them on how they think they should make those changes. Focus, too, on the benefits to them! Don’t be afraid to just simply ask them what they think it takes to perform at their best possible level — the one that drives your sales and service results.

• Definition: SalesMinds create written action plans. Define on paper (you and the employees do this together, but get them to write it down because it’s their commitment) the exact first-step actions today that need to be taken to sell more tires and service faster. Is it asking better questions of customers?

Listening more attentively? If you’re a wholesaler or commercial operation, is it making more effective calls and working on the skills of the sales process or making cold calls? Is it closing skills? Is it the skill of follow-up? Whatever the actions are, trap them on paper! Have the employee sign at the bottom that they agree to take these actions (which are changes) starting now, not later.

• Accountability: SalesMinded leaders again know people — that a person tends to put off or delay changing the way they do things and default back to their old way — the way that no longer works. So, you the leader and your management team must lay down that you will review action plans each week with each key employee. Subsequently, this is the model that one of your store managers will also deploy with their assistant managers — and on down the line to the technician or counter people.

Your goal is make it clear that the way you stay on our store team is to do right now the best things that will generate

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the best results — or our team is not the best place for you.

Because that’s the goal — results, not plans. ■ Doug Trenary, president of Doug Trenary’s Fast-Track Inc., is an award-winning author, speaker and teacher who has helped companies of multiple sizes, including independent tire dealerships, increase sales and productivity since 1985. His book, “The SalesMind,” focuses on how to establish strong positions with yourself, your buyers — and your time. For more information, email him at info@dougtrenary.com or call (404) 262-3339.

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Your turn

Planning on servicing hybrids? Expect investment in equipment and training to be costly, reader says Dear Editor, It was the hybrid Toyota Prius, introduced on the U.S. market 12 years ago, that was the real game changer for the industry, as Michelin radial ply tires were in the U.S. in the 1960s.

In contrast with the Honda Insight, a two-seater, introduced two years earlier, the Prius, although classified as a small car, offered ample space for five adults, including head and leg room, as well as a spacious trunk as compared to a mid-size passenger car, because of its highly efficient design, including its interior to exterior dimensional ratio. This, as compared with other cars, made for a much more effective use of the car’s displaced volume in proportion to its total capacity, hence reducing weight, and therefore manufacturing cost, and on which Toyota lately improved upon with its latest Prius line of cars (the Prius V, the Prius C, and a lower cost five-door coupe, and a Prius 7 passenger station wagon). When well-equipped, the current U.S.-sold Prius, weighing only 3,250 pounds, delivers 52 to 53 mpg under city/highway driving, and costs less than $25,000.

Today the car, for practical purposes, meets the fuel economy standards recently mandated by the U.S. government for 2015. How about that for product development? As with the radialization, the U.S. automobile industry again got caught flat-footed by a foreign producer.

Of importance is that the Prius was developed and produced based on the system approach, which I introduced at Ford years ago for the radialization. The Prius was not an existing Toyota model on which a hybrid propulsion system was merely installed. To be really effective, such power train must be part of a vehicle specifically developed for it, that is to say “tuned,” and featuring high manufacturing precision, low frontal area,

low aerodynamic drag, low overall rolling resistance, low mass (3,200 pounds), and low friction from all bearings operating throughout the vehicle, and, finally, low tire/wheel assembly weight and rolling resistance, as well as much more reasonable tire/wheel dimensions.

Therefore, forget plus-sizing, and keep in mind that the effectiveness of low-power wastage tire/wheel systems grows as a percentage of total vehicle energy consumption.

Furthermore, since the selection of the proper tire/wheel system is of crucial importance to the performance and operational efficiency and economy of hybrid-propelled vehicles, I foresee a back-to-basics effort based on fundamental engineering principles, and this in view of the socio-economic circumstances facing America today.

Finally, the metamorphosis currently taking place in the tire and tire/wheel system industry would have never happened without the U.S. government financial backing (i.e. the taxpayer), for lately the industry, on its own, has neither the guts nor the financial means to do something really good and different for the benefit of consumes.

The question is: Who will pay to train the maintenance personnel to properly service hybrid vehicles in view of the limited technical labor skills available in the U.S. today, the government?

Jacques Bajer, President Tire Systems Engineering Inc. Grosse Pointe, Mich.

Equipment to service hybrids can cost thousands of dollars, Bajer tells us. And add to that the considerable cost for technical training classes. There will be extra costs for servicing diesel hybrids.

Like Bajer says, it’s a game changer.-Ed.

“Tires sales have been soft, but are expected to increase over the next 12 months. Service is the driving force of increased sales and gross profits.”

Paul Bernstein, Principal Delta World Tire New Orleans, La. “Sales dollars will increase while units sold are down.”

Marty Gilkes, General Manager Jee Wholesale Tire LLC Houston, Texas

Join Modern Tire Dealer’s National Advisory Council

Each month, Modern Tire Dealer is guided and influenced by a select group of readers — members of our National Advisory Council. These members’ opinions are the heart of the monthly Ludwig Report, compiled by well-known industry analyst Saul Ludwig. If you’d like to join this prestigious group, please let us know. We’d love to hear from you. Contact Editor Bob Ulrich at Bob.Ulrich@bobit.com or call (330) 899-2200, ext. 11.

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