Tire Sales and Repair
Currently, there are approximately 420 businesses selling and repairing tires and tubes.
Some small businesses are located at gas stations or nearby main traffic areas and larger businesses are located around commercial areas. Businesses active in agricultural areas will also service agriculture tools and tractors that require specialty tires and tubes. Businesses active in commercial areas or close to logistical centers will service trucks and heavy vehicles.
The tire industry is characterized by a number of aspects:
- The industry is highly competitive.
- Prices tend to be significantly lower than those noted in the price-list.
- A regular clientele is comprised of large organization vehicle fleets, in addition to returning private customers.
Customers: Defining the Target Market and its Size, Market segmenting
The market is segmented as follows: private customers (regulars and occasional), businesses- vehicle fleets of companies and corporations, or alternatively rental car companies, truck drivers, tractors, and other service vehicles.
Competition stems mainly from similar businesses active in the area.
Tire vendors can be grouped into importers/wholesalers, tire-refurbishing companies, and used tire vendors. Other vendors include suppliers of tools, lifts, and pneumatic equipment for changing vehicle tires, balancing equipment for tires and puncture repairs, and expendable merchandise.
Due to the industry’s highly competitive nature, vendors use a number of means in order to market their services: promotions, local and specialty print advertisement, hotel vouchers, and reputation and recommendations.
The entrance threshold is relatively high and stems from licensing requirements and high financial investment in equipment and initial inventory. Shop manager’s license is required from the Ministry of Transportation, in addition to the employment of a professional tire and tube shop certified manager.
Human resources in the industry include a manager and sales position, a professional certified manager, as required by law, employees with proper skills required for operating computerized electrical and pneumatic equipment, including wheel alignment equipment. Medium/large businesses may also require a secretary/account manager, warehouse keeper, etc.
Car jacks and pneumatic equipment for opening and closing wheel nuts, specialized equipment for tire repair and wheel alignment, and office equipment and furniture.
Industry revenue and profitability
Revenue in the industry stems from 3 sources:
- Tire and tube sales.
- Labor (repairing punctures and wheel alignment)
- On-site work: roadside assistance, especially for heavy vehicles.
Raw profits are based on discounted prices from given to the business by the vendor. Actual discount rate is usually 20-30% for a private car and 10-15% for trucks.
Typical Terms of Payment
Private customers either pay in cash or in installments by check or credit card. Customary payment terms for business clients running a fleet of cars is EOM+30 to EOM +60.
Initial risk level is relatively high, due to the large investment required in equipment, inventory, and licensing.
Licenses and Certifications:
Local authority licensing, Ministry of transportation licensing, authorization by the Quality of Environment Ministry, and a certification as a professional manager for a tire and tube shop.
Business insurance (for content and inventory), third party insurance, employer’s liability insurance, professional liability insurance, loss of income insurance, and garage liability insurance. In addition to the above, an insurance agent should be consulted in regards to the need for additional insurance.
- Ministry of Transportation, Vehicle and Maintenance Department, 8 Ha’Melacha Street, Tel-Aviv. Phone: 03-5657153/276 Fax: 03-5613583. Internet website: www.portal.mot.gov.il/tnua/index.htm.
- Israel Car Shop Union, Karo Joseph 24, Tel Aviv, P.O. box 67606. Phone: 03-5620113. Fax: 03-5620383. Internet website: www.iga.org.il
- Framework required for business licensing can be found on the Ministry for Environmental Protection website at www.environment.gov.il.
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