There has been a lot of uncertainty in the market. Even with the announcement that automotive is exempt, at least for a month, the threat of the 25% tariffs on Canada and Mexico being on-again and off-again has led to some uncertainty and fear in the auto industry.

According to Cox Automotive, 60% of new vehicles and 40% of those selling for more than $40,000 would be affected. Ford’s CEO has weighed in on the matter and said that tariffs on Canada and Mexico would “blow a hole” through the automotive industry, according to NPR.

In addition, the President announced a 25% tariff on all imports of steel and aluminum coming in April that will be stacked upon the 25% North American tariffs. This will inevitably impact the cost of vehicles as well, with some estimates estimating a $2,500-$3,500 increase in current MSRP, according to the Wall Street Journal.

So, how will this impact your dealership? It’s time to start looking for more revenue streams.

The most obvious place to look is fixed ops. What if I told you that dealerships were losing more than $90 billion, that’s billion with a “B,” to aftermarket providers? It’s not in parts. It’s not oil changes. It’s tires.

Right now, dealerships lose more than $90,000,000,000 in tire revenue. Franchise dealers in the U.S. sold only 9.1% of replacement tires in 2023. That leaves over 90% to their independent competitors. Studies show that over 72% of those customers don’t return to the dealership until it’s time to purchase a new vehicle again.  As we know, keeping a customer coming back to your service lane is a great customer retention tool.

But if they leave your dealership after an oil change, mileage service, or a new part and then drive across the street to an aftermarket tire shop, you are missing out on thousands on just that one customer visit. The amount of service work hiding behind those four tires is enormous, including brakes, struts, and tie-rods, to name a few. The real additional revenue appears when you remove those tires.

EVs have risen in popularity. According to Car and Driver, the Tesla Model Y was the 4th highest-selling vehicle in the US in 2024.  This presents a tremendous opportunity to capture a customer base that constantly needs tires. EV vehicles eat tires.

Due to their weight and the constant torque of single-pedal driving, EVs need new tires every 15,000 to 25,000 miles, much more than a standard ICE vehicle. Bringing in an EV customer that replaces their tires at a much faster clip than an average car owner only increases the potential revenue to your dealership. Remember, the standard approach of using oil changes as a retention piece goes away as the number of EV vehicles take over the road.

Yes, we hear from dealers, “but our techs/advisors don’t like to take the time to measure the tires or aren’t commissioned enough to sell tires.” Well, it may be time to rethink that strategy. Tires have become the new oil change.

Technology exists for the process to be automated seamlessly and less intrusive, where the tread is measured as the vehicle enters the drive.  Information on the tire, including tread depth, age, manufacturer and size, is all fed directly through your DMS and sent directly to the advisor and/or customer. This makes the process smooth, transparent, and easy for your techs to sell the customer tires.

New technology will actually produce a live quote on that moving vehicle as it enters the service drive, providing a price and availability on the current tire, the original tire that the vehicle was built with and a budget tire. Think of it as an “F&I menu” for tire sales, with no chance for human error. Technology is improving daily to help dealers retain their customer base.

Even with all technology present and coming in the future, the service advisor needs to still be prepared and able to speak to and sell tires. Is your team prepared with technology and word tracks to plant the seed and have you put a plan in place to address this available revenue?

With the storm clouds gathering, whether through on-again/off-again tariff threats or tariffs levied upon the key ingredient to making vehicles, now is a perfect time to reevaluate your tire business and capture your share of the $90 billion driving away from your dealership.

With approximately 17,000 franchise locations in the U.S., that equates to almost $5.3M in lost revenue per dealer, on average.  As dealers once focused on bringing customers in and retaining them through oil changes, now is the opportunity to do the same with tires in a quick, easy and painless way for your staff while reaping the revenue for your store.

Tires are the new oil change in 2025 and beyond.

 

Brad Kokesh is the Chief Revenue and Operations Officer at TraXtion.