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Old 03-03-2016, 11:18 AM   #1
TORGY
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Default tire priceing

Here we go again.....

ok so my owner is wondering if we should be doing a flat fee mark up on tire as opposed to GM's suggested markups. Our gross profit for last year on tires was 15.32%. I did do a comparison to the tire price match claims that we filed in 2015 and with GM's pricing structure that we are currently selling at we the average difference was $17.85.

So does it make sense to do a flat markup??? I truly believe that we can sell more tires with a flat fee if our service dept. can upsell other services to make a flat fee mark up turn profitable. It seems our current process is having a "C" tech slam tires on and run the vehicle out the door. Rarely do we see any additional services when we do tires.
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Old 03-03-2016, 12:55 PM   #2
Deniset
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Purchase directly from the vendor, and mark up a percentage across the board.

I think you will be astounded to find there is a sometimes huge difference in tire pricing between the GM program and direct purchase from the tire vendor. I kept track for years, on the back of each invoice, of the difference each tire would cost if purchased on the GM program, and it was almost always more cost effective to purchase directly from the vendor! I was able to keep customers happy, as well as NEVER having to initialize price match claims because we were always lower. My DM hated it, but we always had happy customers, and were able to help retain loyalty to our facility.
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Old 03-03-2016, 04:40 PM   #3
tnpartsguy
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Tires bought off the program cost you on Loyalty.

Tires are a commodity - mark them up $10 ~15 per tire, charge the same to M&B them, throw in free rotation for the tread life, and have the customer return.

I have not come across any huge cost differences in a while, and when I do, I call the Tire Billing helpline, and have gotten a few adjustment credits.
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Old 03-04-2016, 01:37 PM   #4
Deniset
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Quote:
Originally Posted by tnpartsguy View Post
Tires bought off the program cost you on Loyalty.

I used the GM part number, where applicable.
.

Last edited by XDCX; 03-07-2016 at 10:53 AM. Reason: Fixed quote tag to make the post easier to read
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Old 03-10-2016, 11:21 AM   #5
XDCX
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Quote:
Originally Posted by TORGY View Post
It seems our current process is having a "C" tech slam tires on and run the vehicle out the door. Rarely do we see any additional services when we do tires.
That's an interesting observation.

To the extent one of the primary objectives of having dealerships sell tires is to keep the customer "in-house" it seems like the process is somewhat broken if the vehicle isn't evaluated and the customer advised of any needed services.
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Old 03-10-2016, 12:46 PM   #6
tnpartsguy
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Quote:
Originally Posted by Deniset View Post
I used the GM part number, where applicable.
.
Be careful, they will audit your purchases, and if they aren't being billed through the GM Tire Billing program, they will ding you, plus, that is a violation of your dealer agreement. Might talk to your dealer owner or GM and see if they want to continue that practice.
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Old 03-11-2016, 01:37 PM   #7
TORGY
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Most likely it's already affecting your parts sales loyalty if you not buying tires on the GM program. You should check your sales loyalty report.
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Old 03-16-2016, 07:09 AM   #8
bbdrew
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Quote:
Originally Posted by TORGY View Post
Here we go again.....

ok so my owner is wondering if we should be doing a flat fee mark up on tire as opposed to GM's suggested markups. Our gross profit for last year on tires was 15.32%. I did do a comparison to the tire price match claims that we filed in 2015 and with GM's pricing structure that we are currently selling at we the average difference was $17.85.

So does it make sense to do a flat markup??? I truly believe that we can sell more tires with a flat fee if our service dept. can upsell other services to make a flat fee mark up turn profitable. It seems our current process is having a "C" tech slam tires on and run the vehicle out the door. Rarely do we see any additional services when we do tires.
I think it depends on what your owners thought processes are on tires? I think most of us that are in the tire business doing a low flat fee know we are not making much on a tire sale, but we are taking a hit now so we have an opportunity when the customer comes in for the rotation or balance to inspect brakes, air, cabin, etc. to make a good profit. However, if you don't have a good MPI process in place you will just lose money. I think we feel, if we have a good MPI process, doing a flat fee and taking the hit will give us more opportunities for the life of the relationship with the customer. Even if we only sell tires and make 5.00-20.00 it's a win for the future opportunity. Additionally, NADA has done a lot of research on tire sales relationship to service loyalty and additional opportunities to sell new cars/used cars. Most owners and GM's are hearing about tire sales, because NADA and other organizations are showing them high volume tire sales correlate to higher vehicle sales and higher service loyalty. However, your numbers will be impacted if you do a lower flat fee than your current average.
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Old 05-24-2016, 07:42 AM   #9
Deniset
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[QUOTE=tnpartsguy;37891]Be careful, they will audit your purchases, and if they aren't being billed through the GM Tire Billing program, they will ding you, plus, that is a violation of your dealer agreement. Might talk to your dealer owner or GM and see if they want to continue that practice.[/QUOTE

I just bill out the number GM assigns the tire, if it has one. No dings, just my DM asking EVERY TIME "When are you going to get on the
GM tire program?" because it is cutting into his sales numbers. As far as the dealer agreement, I feel it is no different than ACDelco from a WD.
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