This is a short YouTube interview clip (Service Driving Revolution) where Chris Collins and Scott discuss whether tire sales help or hurt dealership businesses. They contrast large independent retailers (e.g., Discount Tire) — noted as selling ~$5 billion in tires annually and using high-volume, high-grossing-product strategies — with typical dealers who lack volume and OEM-tire promotion. Scott argues OE tires are engineered to a car's suspension (OEM spends roughly $5M per car on tire engineering), dealer volume is low compared with independents, and roughly 11% of scanned vehicles need immediate tire replacement (based on 28M+ vehicles scanned). Chris adds that manufacturer rebate flows (e.g., dealer tire rebates ~5% to manufacturers; independents may receive ~10% back) and franchise models can shift profits toward independents; he frames tires as an important retention/productivity lever for dealers, especially as EVs increase service importance. Closing includes a CTA and contact number for questions.
Questions this video answers
About $5 billion per year.
Around 11% (from scanning 28 million-plus vehicles).
Approximately 5%.
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Chapters
Scott.
The independent tire guys are making a lot of money. So there is a ton of money in tires.
They do and they don't. The guys that make a lot of money are a company like discount Tire. And how do they do it? Well, first of all, they're the big gorillas and they sell $5 billion worth of tires a year. Their strategy is interesting. So go there sometime and get tires replaced. I've done it. Took my Mercedes E350 in. They go to the car, they get your tire size, they come back in and guess what? They recommend the highest grossing tire they have in stock. Is it the right tire? Is it the tire that came on it from the manufacturer? They don't give a crap. They want to make money selling tires. Am I happy with the tires that are on my car now? I am not. They're not the same tire as the original OE tire. That was the Continental. Now they made a lot of money. I did it because I wanted to see the experience, but it's not what I wanted. Now the next time I go around, I'm going to put the Mercedes OE tire back on the car because it performs better, it handles better, it rides better, it's quieter, less road noise, it gets better fuel economy because that tire was engineered into the suspension of that car. Did I know that going in? Yes. Did I buy the tires anyway? Yes. I wanted the story. Right. That story is important because dealers don't push the OE tire.
They're the only one from the build sheet that knows what tire came on that car. And there's a bunch of reasons why you want that tire on your car. The number one is safety. Right. It's the safest tire based on load, speed rating, cornering, handling, sidewall dispersion. It's engineered into the suspension. And the average OEM spends about $5 million doing that for every car. Tell the customer that. Let them make the choice. We don't do that. People put whatever tire they want on, then they get dissatisfied with the car. Only have 40,000 miles and the car doesn't ride properly anymore. I'm getting rid of this and I'm going to buy a different brand. That's craziness. People need to change the way they communicate the information to the consumer. Price match guarantee should ensure that a dealer sells a lot more tires. Right. And our data would say after scanning 28 million plus vehicles that around 11% of the tires need immediate replacement.
So if you're doing a thousand ros, you see 4,000 tires, you should sell 440 tires a month. Cause those are in need of immediate replacement. You could sell a few more because some probably need to be replaced. Cause the guy won't make it to the next service visit. But that's just the hard data.
The point is though, that there is a lot of money in tires. So, you know.
We have coaching groups and we have guys that own tire shops in those coaching groups. And the thing that happens to dealerships is manufacturers make a deal with dealer tire. Dealer tire rebates 5% to the manufacturer. The dealers are at a disadvantage when the local tire shop is getting, you know, I don't know, up to 10% back on performance. So the more tires they sell, they get a back end. So they're getting a rebate that the dealers aren't seeing. The manufacturer is seeing that. And they're. They, you know, they kind of have to go with dealer tire or whatever the manufacturer is doing. But the manufacturers are keeping a lot of that money and make, you know, the perception in the dealership world is that there's no money. But I have dealers that have gone out and bought a Goodyear franchise or a big old tire franchise, and they're making a ton of money on tires. It's the model that, that needs to change in a sense where the manufacturers need to understand it. You know, they need to understand. And then the dealers need to understand that that's a retention tool and not a loss leader. But it's seen as, as a loss leader. And that's just not, that's not the case. It's just how the setup is currently. But it's, it's going to have to change because like you're pointing out, tires are going to become more and more important for retention. But also, you know, as electric cars are rolling out, that's gonna be a part of what the service departments need to survive.
And I don't disagree with you on the profit side, but tires tend to be a volume game if you want to make money at it. And here's the example. There's a little town south of Dallas called waxahachie. It's about 30,000 people. They got a discount tire store there. That's where I put my tires on when I lived in Texas. And I said to the manager, I said, so how many tires do you sell a month? He goes on an Average month, maybe 5,000. In a good month, maybe 6,500. Think about that. You talk to a dealer, he's happy when he sells 150 tires a month. And he's got a dozen technicians. It's pathetic. So even if he's making 15 or 20 points on the tire, which is not really what they do in the dealership, for reasons that you just described, they don't have the volume of tires.
Thanks so much for watching this clip of Service Driving Revolution. We're uploading new stuff every day, so make sure you subscribe and click the Bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333-ASK SDR and we'll answer your question on the show. That's 8333-ASK SDR. For special deals on our books and training, head over to to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins, and I'll see you in the next video.
