Potholes Help Sell Wheel-Tire Insurance Protection

Bad roads can do a number on high-profile tires on 17- and 18-in. specialty rims. That’s why dealership F&I managers are responding to consumer demands and selling more tire-and-wheel insurance.

And that’s why F&I providers are offering more such protection services. Pat Becker, president of Dealership Development, says it makes sense. “Tire and wheel (protection) is a great value to the customer, especially those driving high-line luxury vehicles and doing a lot of city driving,” he says.

The nation’s abundance of decaying roads is taking a toll on vehicles in all sorts of ways. Firestone has published a list of what else can go wrong when a vehicle sustains tire-and-wheel damage. That collateral damage extends to:

An F&I manager who knows of a customer’s tire-and-wheel insurance claim should suggest the vehicle undergo a dealership inspection to determine if other damage occurred.

“Consumers see value in this product today,” Brian Feldman, executive vice president of F&I reinsurer Spencer Re, says of wheel-and-tire insurance.

It once was mainly a product for lease customers, he says “Now, we’re seeing it included in packages with other benefits that together provide much more value to the customer, and (sales) penetration numbers are across the board.

 “The reason is tire and wheel has been a hot product (in recent years). If the product is presented correctly to customers, it is realistic to expect a closing ratio of 33% or higher.”

Sales vary by region and season, from 68% in the Northeast during the winter, to 18% in New England during the summer. Sales for high-end intertional nameplates are higher than mainstream domestics.

Bad roads do their share of damage. The AAA Motor Club says the average repair bill is $300 from pothole-related incidents, causing $15 billion in vehicle repairs over the past five years.

But most tire-and-rim damage is from curb scrapes. Low-profile tires are particularly vulnerable in those situations.