Retail tire business?

I've been kicking this one around for a bit now. Competition is fierce but everyone needs tires every few years. I would only do tires to start, then maybe get into suspensions and brakes, targeting enthusiasts. I'd be very active with the local car clubs and could see offering some sort of mobile tire service at larger events. Working on a rough business plan right now.

Who here has done this? What do I need to be thinking about? What's specific to this business? Feedback from Canadian business owners is a plus. The shop would be somewhere in the Toronto area (GTA).

I've been spending a lot of time figuring out how to make my employers business grow. I think it's time to start doing that for myself.

Thanks

If you target auto enthusiasts (like the bunch here), you might do pretty good. Too many tire shops cater to the general public/lowest common denominator. That's why I learned how to do my own alignments and even mount my own tires (we have a tire machine at work). Just didn't care for the service I received from regular shops.

In an area rich in internet-savvy competitive shoppers it could be a tough process. Retail tire margins are pretty thin to start with, and Tire Rack hasn't made it any easier. Add to that the big big stores that are doing tires now.

In the Washington DC area there are very few independent tire resellers, but one that's done very well. They were started in the late 70s or early 80s by an SCCA club racer when radials were a new thing - hence the name "Radial Tire Company". They have close ties to all the marque clubs as well as SCCA, and have an exhaustive knowledge of race tires.

What sets Radial apart is the service. When you go in you'll talk to one of 5 guys - they've been there 30+, 30+, 20, 10, and 5 years respectively. The shop crew seems to have zero turnover as well. Pricing is very fair, and they'll match Tire Rack +$8-10. They don't damage wheels or strip lug nuts, they use a torque wrench, they make great recommendations for tire applications, and they're absolutely friendly and consistent.

Every morning when they open there's a line formed down the side of their building, and if you're last in line you can assume it'll be 2 to 2-1/2 hours 'til you're done. What people are willing to wait in line for is the quality of service - that's what separates them from every other tire shop.

Personally, I think it will be tough to compete with places like TireRack, OnlineTire, DTD.

It's unlikley you'll have the money to tie up in inventory to have things "in stock", so there will be no benefit to guys ordering from you over an online place.............unless you can make it noticeably cheaper. I don't know if you can, I'm not familiar with the margins.

Are you planning on having the proper mouting/balancing equipment? I'd think that might be an opportunity in itself, because of all the guys who buy their tires online. Then if you can occasionally order tires for people, etc.

You could do an old uhaul/ryder box van with all your equipment inside to do just that thing... Do it all away from your home or they will find you on a Saturday night at 11:55pm needing a set mounted for tomorrow.

Plus the truck can serve as a tow vehicle....

I can't imagine successfully competing against Merchants, Mr Tire and the like for the average Joe Blow customer. I don't think you could win.

BUT... like the others, I do think there is a hole in the market for the enthusiast. From the drifters who want tires with different colored smoke to various blings for tires (stripes, colored lettering, spats, etc). As well the DIY guys who would dearly love to mount their own tires.

Actually, I can think of one shop I do know that does a tremendous quantity of tire work. They are just a run of the mill gas station garage. But they will mount and balance a tire for $5 when you bring the rim and tire into them. Every person with dirt under their nails brings tires and rims to them. They regularly have a stack of them to do every day.

He's in Canada - we don't have easy access to Tire Rack - they ship UPS and UPS hoses Canadians royally! The only ones that do are people that are close to the border which does include Toronto and Ottawa.

Jeff, I think there are a number of small firms that do cater to enthusiasts in the Toronto area (see the Toronto Subaru Club forums) however you still see a lot of people complaining about the lack of shops that can do performance alignments etc.

I have to agree with most of the posters however that margins are probably thin.

EDIT: Just checked - $280 worth of snow tires shipped to Canada - add $152.80 in shipping!

And rather than try to compete with TireRack, embrace them. Allow the tires to be shipped there and get $20 a corner for mounting/balancing. Most of the people that use TR and the other online dealers don't have a tirechanger in their basement.

This tied in with Ranger's idea of putting it all in a truck for mobile changes would fill a niche.

It's fairly common at the motorcycle track days I've attended to have a one-man operation selling popular tires and mount/balance service trackside. Guys will either plan ahead to have them done early in the day, or neglect to plan ahead and have them done just to get a couple more sessions in.

That said, there are relatively few common sizes for modern sportbike tires (and they're physically smaller than car tires), so keeping stocked up is less of a challenge. And that guy hustles for, at most 2 days a week during the track season (at least around here where there is a 'season') and I don't imagine he's doing much when there's not a track day within reasonable driving distance.

Just a thought from a different perspective.

What you need to do, well what I'd do, is become a Tire Rack registered installer. That way, anyone in your area who orders tires from them will have you as an option for the install.

I worked at Firestone for about 3-4 years, previous statements about almost zero profit margin in tires is true. We would sell them even at a loss in order to generate other business. We constantly ran the "Buy 3 get 1 free" promotion and would loose our asses on the tires, but make up for it in extra service like brakes, suspension, alignments, etc. As for a profit machine, you're going to have to do maintenance as well. It sucks, but you're going to have to do it. Oil changes net you nothing. They're another way to get the vehicle in the shop to do more work on it.

High performance work such as SCCA and NASA inspections for track days, suspension setups & testing, even hiring yourself out as a trackside tuner will help spread your name and get more clients. My uncle makes a living doing that and transporting race cars all over the country. It's my dream job. Have some car meets at your shop and get really friendly with everyone. Network, network, network! Don't limit yourself to one specific type, make, race, etc or you're going to shoot yourself in the foot and limit your client base.

Just some info I've picked up at some retail automotive shops and high performance shops I've worked at over the past 13+ years... Hope it helps a little.

Tires by themselves probably won't do it, the margins are just too thin to put all the eggs in that basket. Alignments are going to be a solid profit generating add on. Having said that, a good alignment machine is going to be pricey. I'm sure you can find an older one through Hunter or someone but you may find yourself struggling to keep an older obsolete machine working.

You'd need to be able to do brakes etc, that can bring in good money which you will need to pay the rent, electric bill etc. But for the investment in equipment etc, if you are pretty well set on doing this I think I'd look into maybe getting a franchise. If you go that way, you'll be able to offer a nationwide warranty which is a strong selling point in this age of quick mobility.

there is a "mobile" tire shop around here.... tirevan.com

I dont think they are up in Canada though! You may be onto something.

z31maniac wrote: Personally, I think it will be tough to compete with places like TireRack, OnlineTire, DTD.....

I tend to agree on basic price, but from what I have seen the shipping and mounting tends to kill any advantage. I have not tried the authorized installer route, but I suspect they will come out similar.

The last set of tires I looked for cost more to ship then the mounting costs the shop wanted. I did have discounts, so maybe that was why it worked out, but either way it does not seem to be a huge difference.

Of course, if you can mount an balance your own tires, online could easily be cheaper.

Here is why you will fail.

1. I can get tires cheaper online
2. I can get the monkeys at Walmart to mount and balance them for $10/corner.
3. I don't have to deal with some guy to get pricing on the tires I want. Tire shopping is completely DIY.

The market is in other services. I paid $35 to have the corner shop plug a tire on my truck, they picked it up from work, fixed it, brought it back. I will gladly pay $20-25/ea for used tires you can get for free. I bet the profit margin is higher on used tires than it is on new ones. Sure it may be sexier to install new HRE wheels and Pirellis on Lambo's all day long, but the real money is in cash services catering to the lowest common denominator.

z31maniac wrote: Personally, I think it will be tough to compete with places like TireRack, OnlineTire, DTD.

Actually it would be pretty easy. Specialize in smaller sized tires for classic/older cars. No one in the USA does this. Not coker, not tire rack, not anyone.

There are legions of fiat/vw/datsun/bmw/early toyota the list goes on and on looking at their 13" and 14" wheel equipped cars and not knowing what to do. Most do not want to upgrade to the minimum 15" wheels to be able to buy any new tires.

There is a good sized market for smaller tires in all performance ranges. If someone had enough pull to get maxxis to ship them 185/50-14's, continental 195/45-14's, Federal 185/60-13's, a few 175/50-13's, a few 205/60-13's you could have a busy internet sales side to any storefront.

I'd bet the reason no one does it, is because there isn't much, if any, money to be made.

93gsxturbo wrote: but the real money is in cash services catering to the lowest common denominator.

I disagree on that serving the LCD makes or turns you into a LCD. Anybody can be a LCD, which is your normal everyday tire store. There is a niche out there being completely ignored, the ones who doesn't want the normal tire store looking at, much less touching their vehicle. I am sick of having to bend breaker bars to undo lugnuts to rotate tires after having tires put on, finding out the tech was doing is best NASCRAP tire changer impersonation and stripping lugnuts and studs, and etc, etc, and etc. Sure you can/could fill in the gaps with the LCD stuff, but if you aren't known to be part of the normal tire stores around, it won't be your bread and butter.

Thanks for the feedback so far. I did not know that tire margins were so low. Low margin business sucks. You have to sell 10x as much to make as much as one sale at better margins. And you work harder too.

Looking for the niche is key. Offering a different user experience, one where you can charge a premium is the way to go. Stewing on that.

Used tires have a killer margin. Here's how it works: you pick through the takeoffs, pick the best ones and put them on a rack. If you get real lucky, you get a matched pair. You then sell them for $30-$35 each including mounting. All you have in it is the mounting labor. Sweet profit. You need to be sure you sell them 'as/no warranty' in writing.

But it's still hard to make good $ at it in this age. Costco or Tire Rack buys a month's production from Michelin, how are you going to compete with that when you buy maybe 20 at a time? I priced a set of Michelin LTX/2's for the Trooper when I worked for the Toyota place, with my employee discount it was still ~$880.00 for a set of four. There's a local chain (they have 8 stores) that can put 4 of them on for me, same tire, mounted and balanced for $765.00. BIG difference.

If there is a large racer contingent in your area, you might look into stocking the more common Kumho etc DOT race tires, that would be a good niche. Price them more than Tire Rack's retail but less than their retail plus freight and you'd probably do all right. But do your market research first! True enthusiasts make up a pretty small percentage of the overall population.

I can tell you that tire margins are VERY slim.

I've been thinking of basically buying a tire changer or three and a balancer and servicing the "I just ordered these tires, and now need to have them mounted" crowd.

Flat rate $5 (for example...may need to be higher) for each: dismount, mount, balance. Take your old tires with you or I charge you too much to dispose of them (if you don't sell tires, there would be no expectation...legally...for you to dispose of them). Want me to take them off the car? No problem, that'll be $10.

Valve stems are a buck or two if you need them and that's the only product I sell, period. Everything else is labor.

Would you like to borrow a torque wrench to put them on properly at home? Sure! $25 deposit, bring it back in a few days.

Smile!

No, I'm sorry [remember, I'm smiling] I don't take anything but cash as it keeps my overhead low!

Problem is...I don't think I want to be a tire monkey for the rest of my (very short as a result of this line of work) life. I also don't think it would be easy to find help that would do it as well as I could (professional, of-tooth, reasonably clean cut, etc).

I don't know...I love the idea, but I don't see it working out, long-term...realistically.

Clem

The main worry of doing it out of your home garage would be that you mess up someone's wheel or rip their low-profile tire and end up losing a few hundred bucks.

ClemSparks wrote: I've been thinking of basically buying a tire changer or three and a balancer and servicing the "I just ordered these tires, and now need to have them mounted" crowd. Flat rate $5 (for example...may need to be higher) for each: dismount, mount, balance. Take your old tires with you or I charge you too much to dispose of them (if you don't sell tires, there would be no expectation...legally...for you to dispose of them). Want me to take them off the car? No problem, that'll be $10.

The SuperWalmart by me does it for $10, and I can pick up a few gallons of their loss-leading priced oil, something for dinner, kitty food, and a new pack of socks while I wait. And they take credit cards, cash, check, debit cards, gift cards, etc.

Loaning tools? Seriously? People who want to install wheels and tires with a torque wrench already have a torque wrench and the people who don't care don't care. Plus I would love to see the quality of torque wrench I get for a $25 deposit.

93gsxturbo wrote:

ClemSparks wrote some off-the-cuff thoughts...but did not think anyone would consider it a business plan or proposal...

The SuperWalmart by me does it for $10, and I can pick up a few gallons of their loss-leading priced oil, something for dinner, kitty food, and a new pack of socks while I wait. And they take credit cards, cash, check, debit cards, gift cards, etc. You realize torque wrenches are not very expensive right? Do you also realize that they are all inherrently not-very-accurate? Loaning tools? Seriously? People who want to install wheels and tires with a torque wrench already have a torque wrench and the people who don't care don't care. Plus I would love to see the quality of torque wrench I get for a $25 deposit.

Hey man...I pretty much picked it apart myself at the end of my post. but yeah...nice post .

Have fun with your socks and kitty litter. (and dealing with the hassle of the Walmart Tire and Lube express. I used to work at one in college...I know what it's like)

BTW...there aren't many places that will mount, dismount, and balance a tire for $10. If you've found somone who will, go with that. My ramblings above would also mount and balance a tire for $10 (if you carry in bare wheels, for instance).

93gsxturbo wrote: Here is why you will fail.

You guys do need to take in consideration he is in Toronto. Canada is fairly different compared to the US when it comes to these things. I buy tires locally as I can get them for the same price as Tire Rack. Mounting and balancing is up to $20/tire for STANDARD sizes, lo-pro's cost more.

There is money to be made in the business. We have a local guy who has a tire mounting and balancing machine in his garage. It's his business, charges $10-$15 per tire, he is busy 8 hours a day 7 days a week. When somebody tells me they are going to charge me $125 to mount and balance 4 tires, I look at them like they have 3 heads. With the amount of money I've spent having tires mounted and balanced, I should have bought a cheap chinese balancer and done it myself over the years!