Tire Season Tips for Automobile Dealers

Tire season can be a busy yet profitable time for auto dealerships. With some jurisdictions mandating the use of winter tires and others likely to follow, there is a great opportunity for dealerships to cash in on the sale of tires, seasonal tire changes, and the storage business.

In recent years, there has been a dramatic increase in the number of dealerships offering seasonal tire storage to their customers. This can be an effective service customer retention tool and has the potential to be a revenue generator for service shops as well. However, it is important to remember that rubber tires represent a serious fire load and storage should be approached with care and sound risk planning.

There is a great disparity among costs levied for tire storage. While a great number of dealerships offer their tire storage service for free when customers purchase a service package, others charge as much as $1,200 per year for the service. Regardless, if there is a charge or not, the dealer is ultimately responsible for the customers’ tires — the loss of which can result in high replacement costs as well as customer dissatisfaction.

The most common and cost-effective way dealers are able to accommodate the growing demand for tire storage is to locate sea cans or similar storage containers on their lots. These containers are easy and inexpensive for dealers to obtain, and do not yet require a permit in most communities. You will note that these containers usually come with the ability to lock the rear doors with four padlocks to help protect the contents contained therein from theft. It’s disconcerting that some dealerships still leave containers full of customer tires (and customer goodwill) secured with only a single, inexpensive padlock. We recommend that all four lock slots be used to secure the containers in conjunction with products available to house or shroud good-quality padlocks, such that they become difficult to cut. We also suggest dealers consider additional zones on their alarm systems in order to properly secure the containers while the dealerships are closed.

While off-site storage is the preferred storage arrangement from an insurance standpoint, please remember that tires still need to be properly secured when stored offsite. Depending on the arrangement or contract, your dealership may also experience undue road exposure when staff must drive tires to and from the storage location.

This makes a good argument for the use of tire storage companies such as Tire Hotel or Tire Storage Direct.

For dealerships that have built secondary storage buildings on their lots or have expanded their buildings to accommodate storage, there are some basic rules to follow:

• Racking or stacking must terminate two feet below sprinkler heads or ceilings.
• Tires should not be stacked more than eight high.
• Consider Workplace Safety and Insurance Board (WSIB) requirements when staff are required to move tires up or down stairs.
• Any building being used for tire storage should be fitted with automatic sprinklers.
• Any building being used for tire storage should be fitted with an intrusion, as well as heat and smoke alarms.

Without fail, most of your customers will want their tires on or off their vehicles during the same few weeks of the year. For this reason, it is important that you establish a proper system to inventory and store customer tires. This will likely result in fewer missing sets and less wasted time locating tires during the busy times. Some Parts and Service Managers have reported incidents of customers selling their vehicles during “in-between” seasons and not being able to locate their second set of tires.

With the increase in the number of dealerships storing tires, there has been a significant increase in the theft of tires from dealerships across the country. In the event of a loss, dealers need to determine what they have actually lost, so it is vitally important that they have an accurate inventory of customer tires, who they belong to, and where exactly they are stored. Having a proper system in place will help save you both time and money not only in the event of a claim, but twice a year during busy tire seasons.

Are you covered? Speak with your insurance broker to ensure that you have the proper coverage in place for the number of tires you are storing, and the locations where they are stored.