How a dealer's Tires for Life program avoids potholes

Sunday, 15 October 2017 22:01 Written by  Read 10 times
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as a recently established store, launched a Tires for Life program to gain an edge. The service, which covers up to $175 per tire on cars purchased and serviced only at the dealership, has helped the store maintain one of the highest service retention rates in the area, said Service Manager Steve Ferreira.

"It almost seems like a gimmick in the beginning," said Ferreira. "But it's been very positive."

Nearly a decade ago, programs like Mastria's started catching on as a policy to sell to new-car customers. However, after one of the major policy vendors, Millennium Protection Group Inc., in Dallas, went bankrupt in 2009, dealers were left holding the bag to fund tens of thousands of dollars in policy claims. Many have shied away from the concept since.

Ferreira said Mastria pays for its tire program on its own, avoiding a potentially costly reliance on a vendor. The dealership began by setting aside $50 out of every vehicle sale, creating a fund to cover tire replacement costs.

The dedicated fund avoids any potential losses from the program, but Mastria typically breaks even on the service.

"We've done millions of dollars of tire claims, but it's nothing we make money on," Ferreira said.

Express Technician Tyler Daschke measures tires. The program covers up to $175 per tire.

To make it work, Mastria enforces a strict policy requiring customers to have service done only at the dealership. If they go elsewhere, they're voided from the program. Ferreira said about 75 percent of customers participate in the Tires for Life program, and the service department has reaped the benefits of added work.

"Customers are doing more service with us because they don't want to void out of the Tires for Life program," he said.

Such service giveaways are an effective way to increase customer visits to a dealership and educate owners about their cars, said Kathy Gilbert, director of sales and business development at dealership software giant CDK Global.

"There's a delight aspect to it; it's unexpected," Gilbert said. "It tells me you're caring about me and how to use this product you've sold me."

She added that the more customers qualify for such programs, the less likely it is that dealerships will see significant defection to aftermarket service centers. Customers also will be more likely to buy their next vehicle from that dealership, Gilbert said.

"It builds a loyalty to the dealership," she said. "It's a great way to drive traffic."

Ferreira said Mastria's Tires for Life program has given the store a noticeable leg up on local competition, and the service likely will continue for the foreseeable future, given its prolonged success.

"Everyone is selling cars and making almost no money, [so] you've got to have an edge," he said. "Other stores don't offer this, we do."

No blowouts
Mastria Nissan, of Raynham, Mass., carefully manages its Tires for Life program so as to avoid hurting its bottom line while raising its service retention rate.
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