A well-worn tire with more than two thirty-seconds
of an inch of tread and no other damage is not only a marketable
product, but is in strong demand these days by thrifty drivers
in a trying economy. “Technically, used tires are not scrap tires.
These are tires that have been worn, but still have enough tread
to be legally placed on another car or truck,” said Michael Blumenthal,
who works primarily on scrap tire issues as vice president of
the Rubber Manufacturers Association (RMA).
RMA is the national trade association for
the United States tire manufacturing industry. RMA members manufacture
about 85 percent of the tires shipped within the United States
annually.
All tires sold in the United States are required
by federal law to have “wear bars” – molded strips of rubber
that indicate when a tire is worn to two thirty-seconds inch.
Many states require tires worn to two thirty seconds inch of
tread to be removed from service. Tire manufacturers and the
National Highway Traffic Safety Administration (NHTSA) also recommend
that tires be removed from service when worn to that level. NHTSA
has many other guidelines such as tires being free from chunking,
bumps or bulges, showing cord, ply or tread separation. State
motor vehicles agencies set individual standards for tread wear
and damage, and pass or fail is normally at the discretion of
the individual inspector.
RMA estimates that roughly 30 million used
tires are sold each year, which represent about 10 percent of
the approximately 300 million scrap tires annually processed
in the United States. Many used tire shops and wholesales sell
only used tires, some sell predominately used, but also new tires.
Profit margins on used tires can be much higher than on new tires
and starting up a used tire business requires minimal capital
investment for equipment and inventory. That likely explains
the recent proliferation of new used tire shops.
In 2006, RMA looked at 14,000 scrapped passenger
car and light truck tires recently brought out of service. Based
on that, RMA found that most tires come out of service after
three to four years, but no determination was made for tire mileage.
Of course, tire mileage greatly depends on the quality of the
tire, personal driving style, wheel alignment, tire pressure
and other factors. High quality new tires can get over 60,000
miles while cheap ones can get as little as 20,000. Used tire
dealers thrive on those drivers who buy quality tires and replace
them early to ensure safety,
When an old tire is removed from a vehicle,
the transformation of the scrap tire to a used tire typically
takes place at the retailer when the hauler, the company that
picks up old tires, culls out those tires with enough tread to
be sold used. “Just about every hauler goes though and inspects
every tire they handle to see if they can pull that tire out
of the scrap tire flow and make it into a used tire because they
can make a few dollars on it,” said Blumenthal.
Retailers pay haulers on a per tire basis
to recycle old tires. Prices may range anywhere from $0.75 cents
to $1.25 per tire depending on volume and other considerations.
When used tires arrive at a tire recycler, they undergo additional
inspections to qualify for resale. Retailers then buy used tires
in bulk lots, usually by the truckload. Tires are usually inspected
again and pressure tested when resold by the used tire retailer.
“The market for used tires is typically a
function of the economy. From the middle of 2008 up though this
year the number of used tires went down because the general driving
public has been getting the maximum number of miles out of their
tires. Because people are wearing tires out and because the sales
of new vehicles went down the entire replacement market and new
tire sales took a hit,” said Blumenthal. “Now that the economy
is slowly coming back we are expecting a 6 percent increase in
new vehicle sales and a 9 to 11 percent increase in replacement
tires. The number of used tires available should start to increase
in 2011 and 2012. It’s not going to be a sudden influx of useable
tires, but we will begin to see a trend back to normal purchasing
patterns.”
Over the past several years, especially since
the 2008 financial meltdown the number of used tire retailers
and wholesalers has exploded nationally. The growth in retail
shops is due to increased demand by the public for a cheaper
alternative to buying new tires, which have risen dramatically
in price. In turn, this has driven the growth of wholesalers
that supply bulk lots. Wholesalers have seen increased demands
from domestic and export markets.
Marvin Bozarth, former manager of the International
Tire and Rubber Association and now senior technical director
for the Tire Industry Association, gave his take on the used
tire situation. “There has always been a strong market for used
tires. Recently, there’s been some static coming out of Europe
that used tires should not be sold for safety concerns, but that
is not going to happen in this country for many years because
it’s an important market for many people with lower incomes.
When you consider high fuel prices and taxes on vehicles, it’s
tough on a person making $10 or $12 dollars an hour to operate
a vehicle. They can’t afford new tires. New tire prices have
also gone up drastically and they will be going up again shortly
because of the shortage of natural rubber and other factors.”
“Our business is booming!” said Sam Hawa,
owner of Dinosaur Tire and Performance Center and Used Tires
Wholesale, both companies based in Fort Lauderdale, Florida.
Approximately 60 percent of Hawa’s business is used tires. “Without
used tires, I would probably be out of business. The used tire
business is good. Everybody, it seems, is opening a used tire
store. I would say that 3 out of 10 of our wholesale customers
are brand new people who just opened a store and they want a
truckload or container load of tires.” Howa buys used tires from
recyclers and dealers as far north as Canada. “Anyone who offers
tires to me, I buy. Supplies are available, but there’s a lot
of competition these days.
“Tires we sell at retail are usually 50 percent
and above in tread wear,” Howa added. His retail used tires are
inspected, pressure tested, mounted on rims, balanced and installed
on vehicles at prices ranging from as low as $20 to as high as
$45 dollars per tire.
On the retail side, Howa sells approximately
1,200 used tires per month, but he sells tens of thousands more
each month at wholesale prices. For a load of 800 to 900 tires,
his wholesale prices range from $10 to $12 dollars per tire,
dependent on condition. He exports two to three 40 foot containers
per month to the Caribbean and ships truckloads throughout the
southeast.
In reference to what Hawa attributes his
increased sales of used tires to, he stated, “People are broke
and they are watching what they are spending.”
But not all used tire dealers are prospering.
“The past couple of years it’s been slow, it stinks,” said Chad
Pellerin. Pellerin’s family operates Arizona Retreader. They
have sold used tires in the Phoenix area for over 40 years. Approximately
75 percent of Pellerin’s sales are used tires.
“Over the past 3 or 4 years, I would say
40 to 50 new used tire stores have come into the Phoenix market.
It seems like there is one popping up on every corner. Within
the past two years, three have opened within one mile of me.”
Like many western retailers, Arizona Retreader’s
prime supplier of used inventory comes in truckloads from Lakin
Tire, one of the largest tire recycling companies in the country.
Lakin operates a nationwide network of agents and a fleet of
trucks that pick up waste tires and takes them to its collection
plants where they are evaluated, either for shredding and for
recycling, or selected and graded as used tires for resale. Large
truck and heavy equipment tires may be recycled as casings and
sold to retreading companies.
“I try to buy tires that have 50 percent
or better of tread. For a single used tire, our average sales
price is $20 to $30. Mounting, balancing and installation ranges
between $11 and $20, depending on size. We have a lot of repeat
customers. Instead of laying out $800 for a set of new tires,
you can spend half to a quarter of that for used,” Pellerin concluded.
A good used tire from a quality manufacturer
may actually last longer and be safer than some of the new, cheap
tires being sold.
