Tire dealers across the U.S. face huge fines, crippling red tape and a tougher business climate if Congress passes a tire safety Bill currently under debate, the Tire Industry Association claims.
Speaking at the SEMA Show in Las Vegas today, TIA executive vice president Roy Littlefield said if passed as is the Tire Efficiency, Safety and Registration Act of 2015 would give the National Highway Transportation Safety Administration the authority to make independent tire dealers responsible for tire registration.
Littlefield said the move would be a retrograde act, taking the industry back to a system abandoned in 1982 when voluntary registration by consumers, rather than dealers, was introduced. According to the Rubber Manufacturers Association that change resulted in the tire registration rate dropping from nearly 50 percent to about 15 percent.
Bill will shift blame for recall performance onto dealers
Currently, tire dealers are only required to give customers a paper registration card with the tire identification number and then it is up to the customer to register the tires so they can be notified if there is a recall.
The TIA’s position is that if the provision in the Bill passes it could reinstate a 1970s-era paperwork mandate on small businesses and potentially shift blame for recall performance from the product manufacturers to independent gasoline stations, truck stops, and tire dealers. The TIA is also concerned it could force dealers to hand over customer information to tire manufacturers and claims dealers who fail to properly register tires could be fined up to $1,000 per tire and $700,000 per location — as occurred before 1982.
The push for a new registration system comes after two fatal accidents in February 2014. One involved the failure of a BF Goodrich tire on a 15-passenger Ford 350 XLT, which rolled over on a Florida highway, killing two adults and injuring several other people, including children. The tire had been recalled for tread loss or rapid air loss from a tread-belt separation but the tire was not replaced. The second accident involved an 11-year-old Michelin Cross Terrain tread separation that contributed to a Kia Sorrento crashing into a school bus in Louisiana. The four people in the Kia died and 30 students on the bus were injured.
Littlefield said independent dealers are being unfairly punished because TIA research showed about 85 percent of the tires retailers sell are registered. The association is encouraging dealers to sign a petition against mandatory tire registration.
Proposed red tape and taxes will hurt dealers
Littlefield said he was also concerned Washington could go ahead with plans to repeal LIFO (last-in, first out), which would significantly increase both retroactive and prospective taxes on companies using the accounting method.
“Congress does not seem to have to stomach to have a gas tax increase so now we get into a whole array of things that could affect us and one of them is a LIFO repeal,” he said.
“That appeals to Conservatives and Liberals because without raising taxes they can raise $87 billion dollars. We have people on our board who would have to pay out $10 million, $20 million, $30 million in some cases. If you have a large inventory, LIFO could be a huge hit for you.”
“We’re looking at a lot things that could affect our industry (including) reinstating the excise tax on passenger tires — you can see what that’s going to do to the large distributors and the large dealers. You repeal LIFO, you reinstate that tax on tires, and it’s a huge hit to our industry.”
Littlefield was also concerned about a proposal to increase the excise tax on tread rubber by 15c a gallon, which he said would impact retreaders already battling against low-priced imports.