1. Understanding the Passenger Vehicle Tire Replacement Reality
Before discussing incentives, it is essential to understand how tires are actually bought in the replacement market.
1.1 How a Typical PV Tire Purchase Happens
A replacement tire purchase usually follows this flow:
- Customer notices wear, puncture, or vibration
- Visits a nearby tire dealer or mechanic
- Has limited technical knowledge
- Asks: “Which brand is good?”
- Decision influenced by:
- Mechanic recommendation (highest impact)
- Brand familiarity
- Price range
- Immediate availability
Key Insight:
The customer is not shopping for a tire, they are shopping for risk reduction and reassurance.
In this context, sales incentives aimed at dealers or mechanics operate at the very end of the decision chain, where most decisions are already emotionally made.
2. Incentive Schemes Used in the PV Replacement Market (Expanded)
2.1 Dealer Volume Incentives
What it looks like
- Quarterly volume slabs
- “Buy 100 tires, get ₹X per tire”
- Growth-over-last-year bonuses
Why companies use it
- Easy to track
- Immediate dispatch push
- Predictable quarter-end numbers
What actually happens
- Dealers push whichever brand gives the highest payout
- Stock piling before scheme ends
- Discounting to liquidate excess inventory
Example
A multi-brand dealer stocks Apollo, Bridgestone, and CEAT.
If Bridgestone offers ₹300 per tire extra this quarter, the dealer will:
- Recommend Bridgestone aggressively
- Discount it more
- Switch back next quarter if incentives change
👉 Brand loyalty does not increase. Only scheme dependency does.
2.2 Mechanic Spiffs and Loyalty Points
What it looks like
- Cash per tire fitted
- Points redeemable for gifts
- Monthly mechanic contests
Why companies use it
- Mechanics influence brand choice
- Low cost per unit
- Direct behavioral control
What actually happens
- Mechanics rotate brands based on payouts
- Recommend wrong tire fitments
- Overemphasize “scheme brand” even when unsuitable
Example
A hatchback customer needs fuel-efficient tires.
Mechanic recommends a harder compound tire because it pays ₹150 more.
👉 Customer experiences noise, poor mileage → brand trust erodes
2.3 Sales Team Incentives (Field Force)
What it looks like
- Beat-level targets
- Monthly incentive payouts
- Dispatch-based performance
Why companies use it
- Creates urgency
- Sales accountability
- Territory coverage
What actually happens
- Sales reps push volume to easy dealers
- Ignore low-potential but strategic outlets
- Push inventory, not sell-through
👉 Dispatch numbers look strong; retail consumption remains weak.
2.4 Trade Schemes & Festival Offers
What it looks like
- “Buy 3 get 1”
- Cashbacks
- Free gifts
Why companies use it
- Visible to customer
- Festive spike illusion
What actually happens
- Customers delay purchase waiting for schemes
- Brand becomes “discount brand”
- Margins permanently erode
3. The Core Strategic Flaw of Incentive Schemes (Expanded)
3.1 Incentives Treat Tire Sales as a Motivation Problem
Incentives assume:
“If dealers or mechanics try harder, sales will grow.”
Reality:
- Dealers already want to sell
- Mechanics already want repeat customers
- The real constraint is trust, availability, and clarity
Incentives do not:
- Improve product understanding
- Build brand belief
- Reduce customer confusion
3.2 Incentives Create Zero-Sum Competition
If:
- Brand A increases incentives → gains volume
- Brand B responds → regains volume
- Brand C escalates → margins collapse
Net result:
- Same market size
- Higher incentive cost
- Lower profitability for everyone
This is visible across manufacturers including Apollo Tyres, MRF, CEAT, JK Tyre, as well as MNCs like Bridgestone, Michelin, Continental, and Yokohama operating in India.
3.3 Incentives Hide Real Problems
When sales slow down, incentives are increased instead of fixing:
- Wrong SKU mix
- Poor regional availability
- Weak brand messaging
- Inconsistent pricing
This delays strategic correction and creates false confidence.
4. Why Incentives Fail Specifically in PV Replacement
4.1 Tires Are Trust Products
A customer cannot easily judge:
- Compound quality
- Construction
- Longevity
They rely on:
- Brand name
- Mechanic advice
- Prior experience
Incentives do not create trust; consistency does.
4.2 Low Frequency Purchase Limits Incentive Impact
A customer replaces tires once every few years.
Even if incentives influence one sale:
- It does not guarantee repeat purchase
- Poor experience negates future demand
4.3 Incentives Encourage Wrong Selling
Examples:
- Selling highway tires to city users
- Upselling expensive tires unnecessarily
- Ignoring vehicle-specific recommendations
Short-term gain → long-term dissatisfaction.
5. Why Companies Still Depend on Incentives (Expanded)
5.1 Psychological Comfort for Leadership
Incentives give:
- Numbers to review
- Targets to chase
- “Action” during slowdowns
They feel like control, but it is illusory control.
5.2 Industry Herd Behavior
If competitors are offering schemes:
- No one wants to stop
- Fear of dealer backlash
- Fear of shelf-space loss
This locks the industry into collective inefficiency.
5.3 Legacy FMCG Sales Thinking
Many tire sales leaders are trained in:
- Push-based selling
- Distributor expansion
- Volume-first mindset
But PV replacement is not FMCG.
6. Better Strategies Than Incentives (Deep Expansion)
6.1 Brand Trust as the Primary Growth Engine
What this means
Customers choose tires they feel safe buying, not ones that are cheapest today.
How to implement
- Focus messaging on:
- Safety
- Longevity
- Fuel efficiency
- Use simple, consistent claims
- Avoid changing brand story every year
Example
Brands like MRF and Michelin command higher price realization because:
- They signal reliability
- Customers fear regret less
👉 Trust reduces price sensitivity more effectively than discounts
6.2 Mechanic Enablement Instead of Spiffs
Replace cash incentives with:
- Training programs
- Certification badges
- Technical workshops
- Diagnostic tools
Why it works
Mechanics recommend brands they:
- Understand
- Feel confident installing
- Believe will not cause complaints
Example
A mechanic trained on:
- Tire fitment
- Load ratings
- Vehicle-specific recommendations
Will naturally prefer the trained brand—even without spiffs.
6.3 Availability Excellence (Silent Sales Multiplier)
Reality
If the right size is not available:
- Sale is lost instantly
- Incentives become irrelevant
Implementation
- Regional SKU planning
- Vehicle parc-based stocking
- Faster replenishment cycles
Impact
A 2–3% improvement in availability often delivers:
- Higher sales than any incentive scheme
- Zero margin loss
6.4 Pricing Stability Over Discount Volatility
Problem with schemes
- Customers wait for discounts
- Dealers push only scheme SKUs
- Brand price credibility collapses
Better approach
- Clear good–better–best pricing
- Stable margins
- Fewer but meaningful promotions
Example
Customers accept higher prices when pricing is:
- Transparent
- Consistent
- Justified by features
6.5 Dealer Capability & Economics Improvement
Shift focus from:
- “How many tires did you sell?”
To: - “How profitable is the dealer?”
Support dealers with:
- Layout guidance
- Inventory planning
- Digital tools
- Local marketing support
A profitable dealer is a loyal dealer.
6.6 Omnichannel Support (Emerging but Critical)
Even in replacement:
- Customers research online
- Compare reviews
- Check prices
Support dealers with:
- Online visibility
- Verified listings
- Click-to-store models
7. When Incentives Should Be Used (Clearly Defined)
Incentives are useful only when:
- Launching a new tire
- Entering a new city
- Correcting stocking gaps
- Running short pilots
Rules
- Time-bound
- Behavior-linked
- Exit-defined
Never permanent.
8. Step-by-Step Transition Plan (Practical)
Phase 1: Diagnose (0–3 months)
- Identify incentive-heavy SKUs
- Measure sell-through vs dispatch
- Map availability gaps
Phase 2: Reduce Dependency (3–9 months)
- Cut blanket incentives by 20–30%
- Introduce mechanic training programs
- Improve SKU planning
Phase 3: Build Capability (9–18 months)
- Expand brand-led marketing
- Standardize dealer programs
- Stabilize pricing architecture
9. Final Conclusion
In the passenger vehicle tire replacement market:
- Incentives do not create demand
- They only rent dealer behavior
- They erode margins and trust
Sustainable growth comes from:
- Brand credibility
- Mechanic confidence
- Availability discipline
- Pricing consistency
10. Executive Recommendation
Reduce incentive spending by at least 40% over 18 months and reinvest into brand trust, mechanic capability, and availability excellence to achieve higher-quality, more defensible growth.