A little-noticed tire dealer provision was quietly added to the Administration’s “GROW AMERICA” highway reauthorization proposal (HR 2410) in 2015. The provision is titled “Sec. 4112. Tire registration by independent sellers.” If implemented, the provision would reinstate a 1970s-era onerous paperwork mandate on small businesses and potentially shift liability for product liability from the product manufacturers to independent gasoline stations, truck stops, and tire dealers.
The Administration’s proposal would reinstate long abandoned NHTSA rules that were in place from 1970 to 1982, which Congress rejected under the Motor Vehicle Safety and Cost Savings Authorization Act of 1982.
Under the 1970s rules, NHTSA demanded detailed registration information and levied hefty fines on independent dealers who had failed to comply. The demands were onerous and serious legal requirements became the responsibility of mechanics, tire installers, and gasoline station managers. Compliance rates were low but small businesses could not afford to pay the fines, which could reach as high as $700,000, threatening the viability of the family-owned businesses. The system was unworkable and did not advance safety.
In 1982, Congress changed the requirements to establish a voluntary registration process in which customers, rather than dealers, voluntarily registered their tires. This process is similar for other consumer products, such as child safety seats and toys, where the purchaser voluntarily registers their purchase to get recall notices. We are not aware of any other safety products in which an independent salesperson is responsibility for a customer’s product registration or a manufacturers’ product defect.
Negative Consequences of Enactment Sec. 4112
In addition to the problems discussed above that existed in the 1970s and early 1980s, changes in the practices of tire marketing and sales make the mandate an even worse idea today. A relatively new practice of manufacturers is directly marketing and selling to consumers. If dealers are forced to turn over their customer lists to manufacturers then they are at a greater risk of losing that customer forever, because manufacturing giants have much deeper pockets for marketing. This is neither good for the independent dealer nor the consumer: when a customer goes to an independent dealer, they have a choice of products and brands. By reviewing various options, customer often choose a tire that is different than what they initially thought they would buy. When manufacturers directly market based on past sales, customers are more likely to be convinced that they must purchase the exact brand of tire they had before.