Modern Tire Dealer

JAN 2019

Magazine for the professional tire industry

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B u s i n e s s I n s i g h t M T D J a n u a r y 2 0 1 9 60 • Secure Territories Available • DDP Pricing • Full Line: PCR/UHP/Run-Flat/Winter/LT • Passenger, UHP, Light Trucks, Run-Flat and Snow Tires • Petlas has an ISO 9001 Quality System Assurance Certificate • Exports to nearly one hundred countries worldwide • Petlas Tires have passed all US DOT, European ECE, Inmetro, and CCC Certification • Global Production of 10 Million Units per Year • NO TARIFF / NO ANTIDUMPING / COUNTERVAILING • Industry Warranty Accepting Dealer Applications Nationwide Oriente Tire USA, LLC. Petlas Tire USA, LLC. Office: (786)573-0757 David R.J. Halldane, Sales Director Tel: (805) 218-5205 or email: BECOME A PETLAS TIRES DISTRIBUTOR TODAY! TRACK OF TRUST also carry very high margins. If you let the door dictate your auto parts sales, you are letting vehicle breakdowns and marketing dictate your sales. ese are not high grossing products generally. You're not going to make 50% margin on a transmission. Or an alternator on a foreign car. Or a battery. e mix of services, some high grossing, and some low grossing, are what account for your target of 50% parts gross profit margin. Yes, if your market advertises heavily in air conditioning or brakes, your margin on those items will be lower than an area that does not do that. is is why an inspection is so critical. It brings balance to the recipe. Not too salty, not too sweet. Tweaking your parts matrix only takes you so far. But if you are not at 50% parts GP, that is not enough to throw your hands up in the air and give up. If a shop does a professional job for a customer, the shop will balance the needs of the customer with the needs of the shop. at means pay good wages for talented employees, purchase parts and tires from reputable distributors, and charge the proper price to perform those services. If you are not charging the proper amounts, you are putting the employment of all the workers at risk. You are putting your own retirement at risk. You will start to make cost-cutting decisions that are detrimental to continuing business. Sixty percent gross profit on your total sales is a metric that allows a shop to have enough money to first, pay their employees a decent wage as payroll is your first expense. Aer paying your employees, you have all the other expenses associated with running a business, and if you manage the business right, there's enough money le over called net profit. at's not for the owner to spend. It's to reinvest in the business: paint the shop, buy new showroom furniture, purchase the next trailer load of tires. How much gross profit you make directly impacts whether you will be able to pay your expenses and reinvest in your shop. Please, I beg all of you. is is not an easy life, this tire and automotive aermarket. You wake up and it's dark. You come home and it's dark. You see your kids mostly when they are asleep. You unlock the door early when a customer is panicking about a flat on the way to work. You keep the doors open aer closing to finish the brake job. Service advisors are getting screamed at for something they didn't do. Technicians that do this their whole life have broken bodies by age 57. at's a lot of sacrifice, from the general service tech to the owner who is scared to death the next worker's comp claim will put them out of business on any given day. It's time we professionalize this indus- try, have standards, and get repaid for our sacrifices. We can't just wing it anymore. If you're not at the percentages you should be, figure out why and make changes. Talk to other owners. Ask questions. Get help. Send your people out for education on the industry. Send yourself out. Don't give up. ■ Dennis McCarron is executive director of Dealer Strategic Planning Inc., a company that manages multiple tire dealer 20 Groups in the U.S. ( To contact McCarron, email him at

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