The automotive industry is constantly changing, with new trends emerging all the time. However, one thing remains consistent: All cars — whether electric or conventional — need high-quality tires to keep drivers safe on the road. Customer income increased over the past few years, so now is a good time to start a tire business. Several niches exist within this market, from tire manufacturing and sales to repairs.
TL;DR (Too Long; Didn't Read)
Choose your niche before starting a tire business. Decide whether you want to sell online or open a brick-and-mortar tire store and what other products or services you will offer. One way to maximize your profits is to provide additional services, such as car-washing and repairs, tire replacements, vehicle towing and other services.
Research the Tire Market
Gather information about the tire market before drafting a business plan. Research your audience and your primary competitors. Read case studies, see how the industry is trending and assess the costs involved.
The global tire market is forecast to reach $260 billion by 2023, with a compound annual growth rate of 4.4%. Pirelli, Continental AG, Goodyear and Michelin are some of the key industry players. Goodyear alone had global net sales worth over $15.5 billion in 2018. The demand for tires will be largely driven by the rising number of cars in use and the increase in vehicle mileage.
American tire dealers earned about $41 billion in revenue in 2019. Currently, more than 36,000 companies operate in the U.S. market. Fuel-efficient tires, low-rolling tires and other premium models are in high demand due to the increase in consumer income. Furthermore, a growing number of dealerships are offering highly specialized products, such as light-truck tires, passenger tires and off-road tires.
Choose a Tire Business Model
There is more than one way to start and run a tire business. Decide whether you want to work with companies or individual customers and what services you'll provide. For example, you could open a retail store that sells premium car tires from top brands, or you can specialize in heavy truck tires, used tires or new passenger vehicle tires.
Set your business apart from the competition by focusing on a specific niche, such as all-terrain or performance tires. Another option is to offer additional services such as tire replacement, car-washing and repairs.
If you decide to sell your products exclusively online, you won't have to pay rent and utility bills. Additionally, it won't be necessary to apply for zoning and signage permits. The downside is that you won't be able to offer other services, such as car repairs. A brick-and-mortar tire shop involves higher costs but offers more opportunities for growth. The key is to choose a good location, maintain a diverse inventory and employ experienced store assistants with strong customer service skills.
Make a Detailed Business Plan
Write a detailed business plan before launching your tire store. Include a list of suppliers and brands, estimate your costs and make financial projections. Determine which products and services you want to offer and whether you'll sell online or open a tire shop. Define your mission statement and selling proposition.
Think about where you'll store your inventory, how many employees you'll need and who will be in charge of what. Consider outsourcing bookkeeping, accounting, inventory management and other business operations to reduce your expenses. Also, take the legal costs into consideration. While registering a tire business is free, you need to pay for licenses and permits. Contact the local Environmental Protection Agency (EPA) to ask about the permits required for tire stores.
Finally, come up with a marketing strategy to promote your tire business locally and online. List the exact steps in your business plan. An excellent way to market your store is to send introductory letters and catalogs to local businesses. Depending on your budget, you may also place banners in strategic areas around the city, give away branded merchandise and sponsor local events. Leverage the power of online advertising and social media marketing to spread the word about your business and increase your reach.
- Global Newswire: Automotive Tire Market Valuation USD 260 Billion by Forecast 2023
- Ibis World: Tire Dealers Industry in the US - Market Research Report
- Statista: Goodyear's Global Net Sales From FY 2007 to FY 2018 (in Million U.S. Dollars)
- Ibis World: The Retail Market for Auto Tires Industry in the US - Market Research Report
- Mordor Intelligence: Automotive Tires Market - Growth, Trends and Forecast