Bridgestone Corp. posted net sales of 1.77 trillion yen for the first six months of 2018. That compares to sales of 1.74 trillion yen for the same period in fiscal 2017.
I remember a beautiful set of four raised-white letter performance tires that were practically bald, so my boss (not my dad) decided to scrap them rather than sell them used. It was my job to transfer the junk tires to the trailer, which means the plan went off without a hitch. The horse-trader in me couldn’t resist, and I scored some great concert tickets for making my buddies’ car look so good. Those were the good old days.
Used tires were quite common throughout the 1900s. They were a great alternative to purchasing new tires, and with only a limited number of sizes on the market for most of the century, it was easy to pick and choose the best scrap tires for stock. On the passenger and light truck tire side, we would keep anywhere from four to six tires in popular sizes and would regularly sell them to people who needed a tire or two in a pinch. It was easy money and made you hero to the customers who were short on cash.
On the medium truck side, we kept 20-30 of the popular sizes (steer, drive and trailer) and installed them on a daily basis to truck drivers passing through town with a tire problem. We even had a stack we called “homers” that held air with just enough legal tread depth to get the driver home. Each one came with a 50/50 guarantee: 50 feet or 50 seconds, whichever came first. The drivers would pay $50 to $100 for the tire plus the labor and be on their way in less than 30 minutes.
When they were building a riverboat casino just a few miles down the road, I made a killing one summer selling homers to the trucking companies out of Chicago. It was easy money and word spread fast around the construction site that we were the place to go with tire problems.
Life was simple back then. Customers were willing to take a chance on a used tire because they had no choice and a new tire was too expensive. The type of people who bought used tires had no grand expectations regarding life and performance. If it failed a few days after I installed it, they understood that they might get a free replacement and they might not. To be honest, the response was dependent on the circumstances, so each case was different.
Proving the cause of a tire failure is not an exact science.
Here’s how it went most of the time. If you were a good customer, I would help you out every time. If you were an occasional customer but still beat me up about price and complained about everything, then it would usually depend on what I had in stock. And if I had never seen you before and was fairly confident would never see you again, well, it was called a 50/50 guarantee for a reason.
Technically every tire is “used” after it operates on a vehicle, which means there are hundreds of millions of used tires on the road every day. But there is a difference between a used tire already on a vehicle and a used tire that is off the rim of the original vehicle and waiting to be installed on a different vehicle.
Known vs. unknown
There is also a distinct difference between used tires resold by a retailer and used tires sold by a typical used tire dealer who only sells used tires.
When a retailer removes a tire from service as a result of a replacement transaction, they are able to assess the condition of the used tire when it is inflated on the vehicle. If there any separations, bulges or other conditions that can only be identified when the tire is pressurized, the tire will be scrapped. The inflation pressure of the potential used tire can be checked before it is deflated to determine if there was any likelihood of prolonged overloading. Retailers can determine if the used tire is in the right application and if it had been rotated regularly. I will admit it’s not a complete history of the tire, but the fact that the retailer took it off vehicle absolutely qualifies as known history. And, as an added bonus, the used tire will get an internal inspection before it is installed on another vehicle. For the remainder of this discussion, I will refer to these used tires as known used tires.
On the other hand, the typical used tire dealer has very little if any information related to the life of the tire. In most cases, they don’t know where it came from, how it was stored, how it was maintained, and most importantly, if it was operated with insufficient inflation pressure for the load. All they can do is measure the tread depth and look for any obvious signs of damage. I’m going to refer to these used tires as unknown used tires, because the installer basically has no knowledge of the previous life.
The lasting impact of environmental legislation associated with the disposal of scrap tires extends far beyond the elimination of illegal tire dumps. By the 1990s, almost every state had scrap tire laws or regulations that governed the collection and disposal of every tire sold in the United States. Local politicians figured out that they could impose a special tax or fee on tires that would provide the funding to locate and clean up illegal tire dumps and subsidize the scrap tire recycling industry to prevent them in the future. Like any slate of 50 separate state government programs, some of them were good and some of them were pretty bad. That aside, it ultimately created the machine that gave life to the unknown used tire dealer.
A nationwide network of new tire retailers became a gold mine for the unknown used tire market. Retailers who sold known used tires could only keep a limited number of sizes in stock, so a lot of good used tires were scrapped. The retailer still collected a recycling fee for every tire before paying the licensed scrap tire hauler to take away all of their scrap tires, so at the very least it balanced out in the end. In many cases, scrap tires turned into a small profit center for the retailer and it solved a major regulatory problem. Whatever the retailer could make in known used tire sales on top of that was gravy.
TIA is pushing to include used tire dealers in the move to mandatory tire registration.
For the hauler or recycler, every tire that is collected becomes either scrap or stock. I actually witnessed a scrap tire recycling operation where the good tires went on one belt to be resold and the bad tires went on the other to be shredded. The inspector would give it a 2-3 second look off the truck and then make the decision. At the end of the good belt, anywhere from three to five unknown used tire dealers would jockey for particular sizes. By the end of the unloading process, each one of them had a pile they purchased for stock in their stores. It was quite civil until some light truck tires came down the belt. Apparently the margins on those tires were worth fighting for, so it was pretty entertaining.
It would be unfair and irresponsible for me to comment on the unknown used tire business as an industry, but it’s fair to say that it is less formal than new tire retailing or known used tires in most areas. Hand-painted signs and limited facilities are the stereotypical characteristics for the local unknown used tire business. While they are definitely more common in the inner city than they are in the suburbs, the unknown used tire business is still alive and well in most communities across this great nation. Like almost everything in life, if there is demand for a service or product, someone will find a way to fill the need.
Aug. 3, 2000
If I could point to a time where the good old days in the used tire business stopped being good, it would be Aug. 3, 2000. That was the day that the National Highway Traffic Safety Administration (NHTSA) announced it was opening an investigation of Bridgestone/Firestone that was ultimately linked to Ford Motor Co. The lives that were lost and dollars that were spent settling civil lawsuits led to sweeping changes that are still being felt today. As someone who grew up in the business, it certainly felt like the industry lost its innocence in the aftermath of that day.
During the years after the recall was announced, millions of people were inundated with messages about defective tires, so the level of concern by consumers was naturally increased. There was no place for the manufacturers to hide after the intense negative media exposure. Plaintiff’s attorneys became the beneficiary because they had an easy target after every tire-related accident. It suddenly became a lot easier to convince a jury a tire was defective when every news platform reported on the massive recall for months.
Ultimately, I think the public was falsely led to believe that tires were dangerous despite the fact that they are statistically one of the safest products on a vehicle when they are properly inflated and maintained (like any other vehicle component). To this day, too many people still believe a tire failure is automatically caused by a defect because the national media has demonized the industry since the year 2000.
Since then, known used tires have continued to fade, especially on the passenger side of the business. The Tire and Rim Association (TRA), publishes the North American standards for tire dimensions, loads and inflation pressures. In 1980, TRA listed 68 passenger sizes, and by 1989, the number increased to 92. Ten years later, the number of passenger tire sizes more than doubled to 202, so the prospects of stocking a wide selection of used tire sizes were dimming.
By the time tire pressure monitoring systems became mandatory on all vehicles in 2008, TRA listed 312 passenger tires in its annual yearbook. Size proliferation was just one of the factors that caused a lot of tire retailers to get out of the known used tire business after the fallout from the recall.
Liability and legislation
Without a doubt, another major reason for leaving the known used tire business is liability. Insurance companies are driven by data, and if the data shows used tire sales create additional exposure, they have to account for that in the premium. Some might charge higher rates for companies that sell used tires without data because of the perceived additional risk. In fact, I wouldn’t be surprised if some underwriters refuse to even quote a policy if used tires are being sold, known or unknown. They’ve either been burned in the past or know of another incident where the insurance company paid a large claim on a used tire failure. To them, the best way to mitigate that type of risk is to just eliminate it altogether.
Between the data from the tire manufacturers and the insurance companies to the anecdotal incidents that I know of, I have to agree that there is more risk when selling and/or installing a used tire as opposed to a new one. In most legal cases, it all comes down to policies and procedures. If the defendant cannot produce the policies and procedures for inspecting used tires before they are installed, then it will be used against him/her. Likewise, if those policies and procedures were not followed, then it will be used against him/her. Even if the employees followed all of the policies and procedures to the letter, the company that sold the used tire will still be named in the lawsuit. Contrast that with a new tire sale and installation where most of the liability for the product itself belongs to the name on the sidewall, and it’s easy to see why more retailers are getting out of the known used tire business.
Used tire legislation has received a lot of publicity in the last few years, especially the bill that was passed in Colorado in 2014. It is now illegal to sell a used tire with an out-of-service condition in the state of Colorado. If a used tire has 1) tread depth below 2/32-inch in a major groove, 2) cuts that expose ply material, 3) separations, or 4) any damage, then it is illegal to sell and install it in Colorado. Similar legislation has been introduced in Ohio and New Jersey, and it’s one topic where the Rubber Manufacturers Association (RMA) and the Tire Industry Association (TIA) totally agree. It should be against the law to sell unsafe used tires.
Proving the cause of a tire failure is not an exact science. In many cases, it comes down to which expert offers the best opinions on why the tire failed. When decisions rest in the hands of a jury, victims typically have the advantage because they’ve lost something and it’s natural to think that by giving them money, the pain will be lessened to some degree. Plus, it’s a tire and some jurors have been conditioned that tires are inherently dangerous. Jurors are also human and humans have emotions, which mean the outcome of a jury trial can be totally unpredictable. People will decide how much responsibility the defendant has to assume based on a number of factors, but it still comes down to which experts are more credible and convincing.
In the recent ruling Dukes v. Michelin North America, a Florida jury ruled unanimously in favor of Michelin in an $80 million product liability case. Michelin was able to submit evidence that proved the tire was not defective. According to the Michelin press release, “Evidence proved that the tire was well-designed and well-manufactured but had been previously damaged during its service life and then sold used. The case again highlights the inherent risks of purchasing a used tire.” It’s a victory for Michelin and the industry, but there are still hundreds of other used tire lawsuits either in litigation or waiting to be filed that might not end so favorably for the manufacturer.
While I’m sure the insurance industry and the manufacturers are delighted to see a victory in a product liability case involving a used tire, I seriously doubt it will lead to any lessening of their standards. Those who write used tire policies will probably charge more for them and those who choose not to write used tire policies will stay on the sidelines. A few victories are not going to be enough for an underwriter to become more liberal with used tire policies. It’s a high-risk business no matter how you look at it.
The road ahead for the used tire business does not get any smoother or straighter. In my opinion, the whole point of unsafe used tire laws is to criminalize the act of selling an unsafe product that should have stayed scrap. The unknown history used tires that filter through the national recycling systems are always going to include a few ticking time bombs. It could be age or the beginning of a belt separation that only shows up after the tire is inflated. Regardless, the name on the sidewall gets to point the finger at the used tire dealer for breaking the law. Don’t forget that the jury is still comprised of human beings with a wide range of human emotions. Jurors with a strong sense of law and order are going to be influenced when safety regulations are not followed.
Another roadblock in store for the used tire industry is tire registration. By now, everyone should know there will be a return to mandatory tire registration at some point in the future. No one can know for sure exactly how it will work, but chances are pretty good that the used tire dealers will have to comply with the same laws as new tire dealers.
The goal is to limit the number of recalled tires on the highway. In order to achieve that goal, every tire (new or used) must be registered with the manufacturer or a designated third party so the owner of the vehicle can be contacted in the event of a recall. I know for a fact that TIA is pushing to include used tire dealers in the move to mandatory tire registration, and a number of consumer safety groups are in agreement.
For the hauler or recycler, every tire that is collected becomes either scrap or stock.
For new tire dealers, the known used tire business is declining, and I believe it eventually will become a permanent exhibit in the “Good Old Days Museum.” Old timers like me will sit around and reminisce about making more money on used tires than we did on new. We’ll complain about the insurance companies, the lawyers, and of course the manufacturers, because that’s what tire dealers do. And we’ll probably admit that it’s just easier to sell new tires because used tires are not worth the risk any more. The logic behind a known used tire sale and installation won’t change, but the insurance industry may reach the point where they collectively say enough is enough and make the decision for us.
It’s difficult to predict how long unknown used tires will survive. If it continues on the current path of reselling someone else’s scrap based solely on the amount of remaining tread depth and physical appearance, then there may come a time when a day like Aug. 3, 2000, changes everything. It would have to be something incredibly tragic, because the government would need a really good reason to step in and regulate the unknown used tire industry. Unsafe used tire legislation is going to help, but the sad truth is that many of the used tire store owners won’t care. If a tire blows out and kills someone, the survivors will be looking for a settlement and a used tire dealer with limited assets or insurance doesn’t present much of a target for the plaintiff. They just paint a new sign in a new place with a new name under a new owner while the name on the sidewall gets dragged into another lawsuit.
I still say there is little difference between a retailer removing a used tire in good condition and installing it on another vehicle as used or rotating a set of used tires already on a vehicle. In both instances, the technician must assess the condition of the tread and the sidewalls and check the inflation pressure to determine if it can remain in service. Admittedly, there will be situations where the application differences between the two vehicles might create an issue, but as long as the requirements for size, speed rating, and load index are met, the basics are covered so there shouldn’t be any issues or differences.
Unfortunately, the stigma that accompanies used tires will be almost impossible to shake. Differences between known and unknown mean nothing after a tire failure results in an accident. If the tire was installed used, the installer will have to prove it was in good condition and the manufacturer will have to prove it was not defective. When the dealer operates in the known used tire world, the company will have to defend the policies and procedures that were in place to prevent unsafe used tires from being installed. And when the installer operates in the unknown world, the name on the sidewall will usually be sitting at the defendant table all alone, again.
The scrap tire and recycling system creates a vicious cycle of used tires that may never end. I don’t blame participants in the scrap tire industry. They operate on thin margins like the rest of the tire industry, and the money they make from their used tire sales keeps a lot people employed. They are counting on the used tire dealer to perform a thorough inspection before returning the tire to service. The “standard of care” duty is on the installer, not the recycler.
But unknown used tire dealers are not going to let something like liability keep them from buying tires from the recycler armed with the same 50/50 guarantee and reselling them to the public at a profit. It’s practically the definition of capitalism the way they look at it.
Most of the time the system works. The majority of the unknown used tires installed every day are just as safe as the hundreds of millions of used tires that operate on the road. When the used tire industry is good, everyone goes home a winner. When it’s bad, people might not come home, but the unknown used tire dealers will keep selling their used tires until some unknown event forces them to stop. ■
Kevin Rohlwing is the Tire Industry Association’s senior vice president of training.
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