Tire Shop Business Overview

A tire shop serves as a specialized automotive retail and service business focused on selling and maintaining vehicle tires. These businesses stock various tire brands and sizes to meet different vehicle requirements, from everyday passenger cars to commercial trucks.

Beyond tire sales, most shops provide mounting, balancing, and basic vehicle services that influence tire performance and safety.

Related: Checklist To Start A Business

How Do Tire Shops Make Money?

Tire shops make money by selling tires and providing related services to customers, meeting the essential needs of vehicle owners and operators. Revenue comes from a combination of product sales, installation services, and maintenance offerings, often including:

• Tire Sales: This represents the largest source of income for most tire shops because tires need regular replacement due to wear, damage, or age.
• Installation Services: Shops charge for mounting new tires, balancing wheels, and performing tire rotations. This includes labor costs and fees for disposal of old tires.
• Wheel Alignment: Technicians adjust vehicle suspension components to ensure proper tire wear and handling. This service often complements new tire installations.
• Additional Automotive Services: Many shops offer brake repairs, suspension work, oil changes, and other basic vehicle maintenance to provide year-round income between tire sales.
• Commercial Fleet Services: Some shops establish contracts with businesses to maintain their vehicle fleets, providing regular tire replacement and maintenance.
• Tire Repair: Shops fix flat tires, patch punctures, and perform other repairs to extend tire life when replacement isn’t needed.
• Parts and Accessories: Additional revenue can comes from selling related items like custom wheels, valve stems, tire pressure monitoring sensors, and wheel weights.

Industry Statistics

Tire dealers operate under NAICS code 44132 – Tire Dealers, which includes businesses that retail tires and tire tubes for passenger vehicles, sports utility vehicles, and commercial trucks. Many of these businesses also provide installation and basic automotive maintenance services.

Here are highlights about the tire dealer industry:

Tire Dealer Industry Size & Growth: The tire dealer industry generated $45.7 billion in revenue last year. The industry grew at 0.5% annually over the previous five years. Over the next five years, growth is expected to continue at a similar rate due to increased demand for fuel-efficient tires and rising vehicle ownership rates. (IBISWorld)

Number of Tire Dealers: There are 28,386 tire dealers currently operating. The three largest companies – Reinalt-Thomas Corporation, TBC Corp, and Sumitomo Corp – control a moderate portion of the market. Reinalt-Thomas Corporation, operating as Discount Tire Company, has the highest market share. More than one-third of all tire dealers are single-location establishments. (IBISWorld)

Tire Dealer Profit Margin: Tire dealers see an average net profit margin of 5.9%.

States with Most Tire Dealers: Tire dealers tend to concentrate in areas with high vehicle populations, particularly in regions where personal vehicles are the primary mode of transportation. The highest concentration of tire dealers is found in states with large populations and extensive road networks. (Bureau of Labor Statistics)

Costs To Start a Tire Shop

Starting a tire shop ranges between $150,000 and $500,000. This amount includes the main equipment, initial inventory, and location expenses needed to open the business.

Here are some of the main costs to consider when starting a tire shop:

Location: A commercial location suitable for a tire shop needs adequate space for service bays, tire storage, and customer parking. Initial costs include the first and last month’s rent plus a security deposit. Building modifications for tire shop operations often involve installing vehicle lifts, ventilation systems, and storage racks, which could add $50,000 to $150,000.

Equipment: The basic equipment needed includes tire changers, wheel balancers, alignment machines, and vehicle lifts. A complete set of professional-grade equipment costs between $75,000 and $200,000.

Initial Inventory: Maintaining a diverse selection of tires requires purchasing various sizes and brands to meet customer needs. An initial tire inventory plus basic supplies like wheel weights, patches, and valve stems ranges from $50,000 to $100,000.

Tools and Shop Supplies: Basic hand tools, air compressors, impact wrenches, and diagnostic equipment are needed for daily operations. Complete tool sets and supplies for the shop cost between $15,000 and $30,000.

Point of Sale System: Computer systems, tire tracking software, and invoicing equipment help manage inventory and process customer transactions. These systems cost between $5,000 and $10,000.

These estimates provide a general idea of startup costs, but actual expenses will vary based on factors like size and location.