Selling Certainty

There’s an old saying about the weather: everybody talks about it, but nobody does anything about it…and as ridiculous as that statement is, the coming foul weather season does offer something dealers can do in tire sales, if the weather and economy cooperates. Can anyone predict the coming selling season?

As the weather turns colder, the need for winter product as a safety maintenance service is clear; whether Canadian consumers are prepared to make the investment in uncertain economic times is less certain. According to the most recent statistics from the Rubber Association of Canada, original equipment tire shipments dropped a whopping 30.9 per cent year over year as of January 2008, with declining overall new vehicle sales (especially from the Detroit Three) and reduced Canadian manufacturing activity as primary causes. The replacement tire market, however, is decidedly optimistic with numbers for the same period showing a 26.1 per cent increase in shipments. Replacement tire volumes now double the OEM demand, from approximate parity in January 2007. The implication is clear: the new car boom is over and buyers are holding onto their vehicles, leaving the door open for winter product sales, especially when all-season rubber wears to the bars in the fall season. The same economics that’s killing new vehicle sales, however, will have an impact on sales, requiring a stronger, clearer value proposition than last year.

Define the need, make the sale

The key to changing winter tires from a discretionary purchase to an accepted part of vehicle maintenance depends on your ability to defeat the “all-season” marketing machine used by the major manufacturers. Much of the broadcast and print advertising showing winter capability with all-season tires is targeted at the American market, but the damage it does runs Canada wide. In heavy snow regions, the tread pattern may do much of the talking, but with modern ice radials looking much like all-seasons to the untrained eye, flexibility at temperatures below 7C, combined with the “snowflake” certification are important selling points. The Rubber Association of Canada has several useful tools on their web-site (www.rubberassociation.ca) which can help educate the consumer. The content is also not brand-specific, so the tools are useful for any dealer and present an impartial viewpoint that may help swing skeptical consumers. Another underused selling tool is the allowable stud regulations. Studs are still undersold and underutilized in much of the country, and most provinces and territories have specific dates defining the winter season. (See chart below)

This creates a natural target date for new tire sales as well as for mounting and dismounting. Storage of off-season tires can also be a factor in closing the deal, especially in urban areas. If your clientele includes owners of high-end luxury/import vehicles, keep in mind that their sizes may require a special order, especially for run-flat fitments. A typical lost sale goes like this: the customer arrives on a snowy Saturday morning expecting “while you wait” service and discovers that you don’t have the size in stock. The customer than visits competing stores until they discover that no one carries it as inventory, then places the order at the last dealer they visited. If that dealer is sharp, they’ll attempt to lock in future maintenance work while they have your customer in their showroom. One way to fight back is to annotate their profile in your customer database software allowing it to flag the service writer to mention the special order issue at a regular service, either pre-selling the tires, or at least conditioning the customer to expect that their rubber won’t be available off the rack.

Will the weather cooperate?

For most Canadians, this means “mild” but in our industry, foul weather in late fall and early winter is definitely a good thing. Environment Canada uses a complex method for forecasting, and publishes maps showing likely zones of normal, higher than normal and lower than normal temperature and precipitation. If the predictions hold up, much of Canada will experience lower than normal temperatures through December. Exceptions are most of Ontario and southern Quebec as well as Newfoundland and coastal Labrador, which are predicted to experience warmer than normal temperatures. While these estimates can’t predict sudden storms, which are common drivers of floor traffic in early winter, they do suggest that it makes sense to market and merchandise winter tires by temperature, not snowfall, pulling the season into line with the actual weather conditions. From a sales perspective, this may require an emphasis on rubber compounds and technologies for ice grip and water clearance with less emphasis on open, lugged tread patterns. A side benefit of this approach is the ability to differentiate winter SUV/light truck tires compared to lugged “off road look” all-season product. A related effect of selling winter product to these customers is the opportunity to up-sell optimised SUV/light truck tires with quieter, smoother-riding compounds and construction, since the winter tires take care of the foul weather season.

Is climate change a factor? This year, probably not, but taken over time, there is evidence that the Canadian climate is changing. A comprehensive study by Environment Canada’s Xiaolan L. Wang (“Climatology and trends in some adverse and fair weather conditions in Canada, 1953-2004”) tracked fair and foul weather events over 90 Canadian locations and reported that “freezing precipitation has become more frequent in the region north of 50N (especially in spring and autumn) but less frequent in southern British Columbia (BC), central Prairies, and the Great Lakes area in autumn-winter, as well as in northeastern Canada in winter. Blowing snow occurrence has decreased significantly almost everywhere across Canada, with the most significant decline in southwestern Canada in winter.”

What does this predict for the upcoming selling season? With the ultimate wild card of the ongoing credit/ banking debacle in play, this season may be more about affordability than the persuasive case for the right tires for Canada’s climate. On the other hand, a commitment to hold off on a new vehicle purchase for a year or two opens the door for potential sales to consumers who wait too frequently before getting around to buying dedicated winter product. And don’t forget that the actual cost-per-kilometer is lower than your customer supposes since the all-seasons don’t wear when they’re off the car. The psychology of the current times may also play a part; for some consumers the additional safety of winter tires may be appealing in a time of economic uncertainty. And the sales will do the same for Canadian dealers.

SSGM

www.weatheroffice.gc.ca/saisons