Purpose.

Requirements for motor vehicle manufacturers [ TRR URL ]

CHAPTER V--NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION,
DEPARTMENT OF TRANSPORTATION

PART 576--RECORD RETENTION

Noteworthy entries:

http://isearch.nhtsa.gov/aiam/aiam2845.html | Part 574.7 of the Code of Federal Regulations (CFR) provides that dealer of tires may supply his own form on which to record information specified in paragraphs (a)(1), (a)(2) and (a)(3), as long as the form contains the required information, conforms in size and is similar in format to the 'Universal Format' form set forth in Figure 3 of that part. Sincerely, Joseph J. Levin, Jr., Chief Counsel

The first question you raise deals with the cost your constituent, small tire dealer, is obligated to incur to satisfy the requirements of the program. In order to understand fully the cost involved, it would be useful to consider precisely what is required by the regulation.

1. A dealer must fill out a tire identification form supplied by the manufacturer for each purchase. This requires entering the name and address of the purchaser, the tire identification number which appears on the tire(s), and the company's name and address or number on the form. Only several minutes are required to complete the form.
2. Once a month, the dealer must send the forms to the manufacturer of the tires. We are unable to understand how the regulation appreciably increases small businessman's cost of doing business. It is our view that additional staff is not necessary to carry out the registration of tires, and we have no information which would suggest the contrary. The situation would be somewhat more complex if your constituent sold tires manufactured by more than one firm, as each manufacturer supplies its own form which must, of course, be returned to the appropriate manufacturer. In this case, however, we have required that manufacturers supply to the dealers upon request a form with a standardized format to simplify completion.

The second matter you raise is the failure of some dealers to complete the registration forms. I share with you a concern that despite provision for substantial penalties, some dealers insist on breaking the law. It had been the policy of the NHTSA to delay strict enforcement of the regulation in the belief that dealer unfamiliarity with the regulation might be the cause of the poor response and that the situation would improve. In view of the continued unsatisfactory rate of compliance, the NHTSA has advised me that it will increase enforcement action to eliminate competitive advantage based on noncompliance.

Another issue raised in your letter is the cost of administering the regulation as compared to its benefit. I have queried the NHTSA as to their estimate of this cost and have been advised that the one dollar figure which you cited in your letter relates to all costs of both the manufacturer and dealer to register and maintain records for all four tires on a vehicle rather than a single tire. I am sorry for any confusion which might have arisen. Even utilizing a higher cost figure, however, it is NHTSA's view, in which I concur, that the expense of tire registration is not exorbitant in terms of helping to insure that a motorist will be advised if a tire he purchased is defective and could lead to death, a serious injury, or damage to his vehicle. As I am sure you realize, the purpose of any insurance program, be it fire insurance for the home or health insurance for the individual, is to protect all insured individuals against the catastrophic loss that only some of the insured individuals will actually experience. It is of course difficult to associate a dollar figure with the potential damage which could be caused by a defective tire. In this regard, however, you may be interested in knowing that a Federal jury in Florida last year returned a $2,300,000 judgment against Sears Roebuck & Company in a tort action involving a defective tire. You also suggest in your letter that only 25,000 tires were recalled in 1974. Our records, however, indicate that 1,098,000 tires were recalled in 1974 in 31 recall campaigns. Further, 2,526,480 tires have been recalled in the 119 recall campaigns initiated since the inception of the program.

It is my view that the program should continue in light of the defect potential inherent in the sale of 200,000,000 tires annually. In addition to planning increased enforcement, the NHTSA is evaluating the consumer response rate in tire defect notification campaigns to determine whether it can be improved and whether the low response rate is due in large part to tires no longer being in the hands of the initial purchaser. I have already requested the National Motor Vehicle Safety Advisory Council to conduct a broad study of the safety defect and recall problem, which includes a consideration of the adequacy of the tire recall effort.

Based on these evaluations, the NHTSA should be able to determine if legislative action is necessary. Let me assure you I appreciate your personal interest in this matter. Sincerely, William T. Coleman, Jr.

Dear Mr. Nolan: This is in reply to your letter of February 17, 1976, in which you as six questions pertaining to tire identification and recordkeeping, and to defects notification and recall. The statutory basis for and regulations governing this subject are set forth in the National Traffic and Motor Vehicle Safety Act of 1966, 15 U.S.C. 1391, et seq., and 49 CFR Part 574. I have enclosed copies for your reference. Specific answers to your questions follow in the sequence asked:

1. Manufacturers are required to retain tire registration information for three years. (49 CFR 574. 7(d)).
2. As in all defect recall campaigns under our Act, the tire manufacturer, not the Department of Transportation, traces and notifies individuals of defective tires. There have been approximately 2,526,480 tires subject to recall in 119 recall campaigns.
3. The number of persons employed by industry to process the information has not been reported, but the filing systems are highly automated by the use of computer processing techniques. The cost of storage of this information during the three-year period is minimal. The recording of information at the time of purchase, however, is manually performed at the retail level, usually by the salesman, and has been estimated by dealers to cost anywhere from 5 or 10 cents per tire up to $2.50 per tire. The substantial difference in cost estimates is to a large part due to whether or not one assumes the salesman who completes the forms and the clerk who mails them would not be employed but for the tire registration process. The National Highway Traffic Safety Administration (NHTSA) takes the position, which has yet to be refuted, that additional personnel are not needed to carry out the program on the retail level and consequently the costs (sic) at the lower end of the scale. Simplification of the process has been achieved with the adoption of a standardized report form on which to write (sic) the name and address of the purchaser. A copy is enclosed.
4. There is no cost incurred by the Federal government attributable t the tire registration (sic) and recordkeeping procedure except indirectly in that the regular staff, as one of their functions, assigns and maintains a manufacturer's identification code list and monitors the program of defects recalls and regulation enforcement. The cost of this work has been determined to be about $34,000 annually.
5. The NHTSA has undertaken no prosecution of dealers or manufacturer for violation of the tire information and recordkeeping regulation. Fourteen civil penalties have been assessed for violation of the regulation, although these all occurred shortly after the regulation became effective.
6. We do not presently anticipate a major revision of the regulation However, as with all our (sic) standards and regulations, it is regularly reviewed and revised to increase its effectiveness while lowering its cost to the industry and the consumer. Further, dealers, manufacturers, and others are free at any time to petition the NHTSA to amend the (sic) regulations. These procedures, which are found in 49 CFR, Part 552, require that we act on petitions within 120 days.; At the present time, this program is also being analyzed by the National Motor Vehicle Safety Advisory Council as part of its study of 'Safety Defects and Recalls' requested by Secretary William T. Coleman. The Council's report will also guide us in revising and improving the regulation.<<<; Sincerely, James B. Gregory, Administrator

For your information, I have enclosed a copy of 49 CFR Part 574, Tire Identification and Recordkeeping. The tire registration requirements applicable to motor vehicle dealers are set forth in section 574.9. Motor vehicle dealers are not required to register the tires on each vehicle sold; they are only required to register tires in two instances. First, if the dealer is selling a new vehicle, the tires must be registered by that dealer only if the vehicle is equipped with tires other than those installed on the vehicle or furnished with it by the vehicle manufacturer. In the far more common situation where the dealer delivers a new vehicle with the original equipment tires installed on or furnished by the vehicle manufacturer, the vehicle dealer has no registration responsibility for those tires.

Second, if the motor vehicle dealer is selling a used vehicle or leasing a vehicle for more than 60 days, the dealer must register the tires on that vehicle only if he has installed new tires on it. Again, it is more usual for a used vehicle to be equipped with the used tires already on it, and, in that case, the vehicle dealer is not required to register the tires. Moreover, tire registration is not required for any dealer when a vehicle is equipped with retreaded tires, even if the dealer installed the retreaded tires on the vehicle.