This manufacturer is selling tires for a monthly fee
European tire manufacturer Zenises is selling customers new tires for a flat monthly subscription fee of €4.99 — roughly $8.50 in U.S. dollars.
It’s called Z Tyre Flatrate and the idea is to sell tires “as a service” to consumers, much as apps like Spotify allow them to buy music-as-a-service. If it proves profitable in Europe, it’s a model that’s bound to make its way here to the U.S.
Traction News caught up with Zenises general manager Jorge Crespo at the REIFEN Show in Germany recently to find out just how tires-as-a-service works.
“The idea is to be in line with the times,” he said.
“Everything from music and television to cars and houses, these days you have the option either to buy or to use for a fee. When you choose to use rather than buy, you don’t have to pay the full price; you just pay the rental.”
So, what does the tires-as-a-service model look like?
Z Tyre is based on a small monthly subscription fee for the consumer — just like Netflix. While a Z Tyre subscription might not get you season four of House of Cards, it will cover all new-tire-related costs — meaning you can fit or upgrade your Zenises Z Tyre-branded tires as you need and “drive away with a renewed peace of mind.”
As the tires near the wear limit (usually around two millimetres of tread depth) they are simply replaced with new ones. This means the customer always has tires with sufficient tread. The customer also gains maximum driving benefit because they have an affordable way to make sure they have access to the latest model tires when it comes to replacement time, rather than buying a low-cost product.
Zenises says there’s no additional price hike for using this method — the customer does not pay any more than if they’d bought the tires as a single purchase on any given day.
The subscription price increases depending on the fitment.
Zenises claims there are several advantages to this new contract method:
1. Consumer choice
“Distressed”, short-term, cost-based decision-making can be eliminated, allowing the driver to obtain the maximum tire performance possible from the retailer with the bonus of reviewing the most suitable tire option — as opposed to simply looking for the lowest cost purchase.
2. Trust in the dealer
The arrangement allows the tire dealer and the customer to build a deeper and more trusting relationship because the dealer can help guide the customer into making qualified purchases which are often more appropriate to circumstances.
3. Retailer becomes preferred long-term supplier
The monthly contract method locks in the customer and allows the retailer to become a “one-stop shop” for the customer. That’s right from the beginning of the relationship, including professional consultation and the initial offering of the tire flat rate subscription, right through to fitting and other tire-related services.
But can you really make money out of it?
Zenises obviously thinks they can — although this is very much an early stage “testing the waters” program. But, the company argues, they’re effectively creating predictable, long-term, repeat buyers who regard their tire retailer more as professional advisers on tires rather than “a place of last-minute, low-cost, infrequent ‘distress’ purchases.”
“Cash flow and business income is frequently erratic and hard to forecast — based on the unpredictable purchasing needs and wants of customers,” the company said.
“This could represent an exciting and substantial commercial shift for the tire trade.”
What does the model look like from the dealer’s end?
This subscription model is being offered through 600 partner stores throughout Germany. Those stores are the first point of contact for customers should they have a flat tire or need a tire inspection, refitting or storage, for example.
The retail partners are key to the effectiveness of the subscription model because they become a “full-service” center for Z Tyre subscribers.
Z Tyre’s service to dealers includes the support of a local consignment stock warehouse to ensure rapid and constant availability of the tires. After booking an appointment with the customer, the retailer has the tire size and specification details, even before the driver arrives (and within 24 hours).
Zenises says because dealers receive ongoing revenue from the subscription method, they “can also count on a regular income in times of fluctuating work, which, in turn, helps them to cover any monthly fixed costs and relieve any unwanted financial cash flow pressure.”
Still very much a trial service
Crespo told Traction News the service targeted the younger generation, which is used to paying subscriptions for services.
“It comes more naturally to them, buying through this concept,” he said.
While Z Tyre is currently exclusively for Zenises’ tires — and mostly high-performance and ultra-high-performance tires at that — there is plenty of potential for the service to grow, especially beyond Germany’s borders, if it proves profitable and effective.
“It’s a concept product but we have high hopes,” he said.