Nitrogen Can Pump Up Profits

There have been a lot of discussions in recent years about the benefits of inflating tires with nitrogen.

Many shops in the business of selling tires are now equipped with nitrogen. Consumers are asking for nitrogen and if your service department sells tires, not having nitrogen could result in lost sales opportunities.

Naturally one reason the service department should have nitrogen available is the competition down the street may have it. Besides that, offering nitrogen can also be a profit opportunity.

Before looking at the profit potential of nitrogen, let's look at the benefits to the consumer.

Customer Benefits

Oxygen has smaller molecules. They absorb into rubber much easier than nitrogen. Because of this, nitrogen maintains tire pressure better than regular air. Tires that maintain the proper pressure have three important benefits to the consumer:

• Extended tire life.
• Improved fuel efficiency.
• Increased safety.

Regular air also accumulates water through humidity. A nitrogen system virtually eliminates water commonly found in regular air. Water that's introduced into tires can have some the following negative effects:

• Change in tire pressure with temperature fluctuations.
• Increased corrosion of vehicle's wheels or rims.
• Can cause corrosion of tire monitoring sensors (if equipped).

The change in tire pressure due to the ambient temperature variations with water can also play havoc on the tire pressure monitoring systems (TPMS). As the ambient temperature drops, the TPMS warning light may illuminate.

Profit Potential of Nitrogen

There are quite a few options to choose from when looking for nitrogen inflation equipment. There are self-generating units and equipment that works in conjunctions with the shops air compressors. The equipment can be purchased outright or leased.

On the lower end of the scale, a system can be purchased for around $6,000. Depreciation over 5 years would create a monthly of expense of around $100. A lease would run about the same amount.

Most shops are charging $20-$40 to inflate a set of tires with nitrogen. With most systems, it takes a few minutes to fill four tires. Other than the cost of the equipment, the cost to generate nitrogen is virtually free.

To illustrate the profit potential we'll assume a cost of $5 per fill for a set of tires to cover labor, utilities and equipment maintenance.

In this illustration, if only one nitrogen fill were sold per day, the equipment would pay for itself in less than a year.

If an average of five nitrogen fills were sold per day, the equipment would pay for itself in less than two months.

Other Profit Considerations

When consumers shop for tires, they not only look for the best price, they also consider other benefits that a tire shop may offer. Some of the common perks offered by tire shops may include free lifetime tire rotations, free lifetime balancing and free road hazard warranty

Adding a free nitrogen fill if the customer buys a set of tires would increase the perception of value of purchasing tires from your shop.

Using lost leaders is a common practice to drive in traffic. Some of us will practically give up the farm to drive in traffic. Advertising a free nitrogen fill with every service is an inexpensive method to help drive in more traffic.

In the advertisement, list some of the benefits of nitrogen-filled tires. Customer perception of getting a $40 value for free, that increases safety and fuel efficiency, may be enough to get them into the shop.

To motivate the staff, meet with the service advisors and explain the consumer benefits of nitrogen-inflated tires.

To get the ball rolling, a contest or other incentive may help to get them motivated to sell nitrogen. Bragging rights and a few extra dollars in their pockets can go along way to kick off a new program

If current trends continue, the use of nitrogen in tires will only increase.

If keeping ahead of the competition isn't enough of a reason to offer customers a nitrogen option, then the increase in profit potential should be.

James Clausen has more than 25-years experience in fixed-operation management at auto dealerships.