Bridgestone/Firestone North American Tire LLC is warning that the “gray market” is tempting customers to go for truck tire deals that are too good to be true.
Speaking at the tire maker’s annual dealer meeting this week in Chicago, Singh Ahluwalia, president for commercial products, said “rising gray market activity is a major concern.” He challenged the company’s dealer body to “do the right thing and help stop this cancer.”
Also addressing the topic were Kurt Danielson, director of marketing for truck & bus tires, and Art Campagnoni, director of North American commercial sales. Danielson said that the emergence of Internet-based buying groups is also a concern. Campagnoni said gray market tires bubble to the surface from a number of sources, including cross-border shipments and even national fleet buyback programs. He stated that gray market activity, whether by dealer store or fleet customer, will not be tolerated.
According to the Alliance for Gray Market and Counterfeit Abatement (AGMA), the gray market is “the unauthorized sale of new, branded products diverted from authorized distribution channels or imported into a country for sale without the consent or knowledge of the manufacturer. It is the unauthorized sale or improper diversion of new products obtained under deceptive circumstances. This would mean new, branded products being diverted from authorized distribution channels or imported into another country without permission of the original manufacturer.”
Indeed, Bridgestone/Firestone executives pointed out the danger of gray market tires to fleets are two-fold. First, they will not be covered by OE warranty if they fail. Second, if they are tires originally designed for use in another truck market, they may fail sooner or differently than a seemingly similar product engineered for application in the U.S. or Canada.
In other words, it may be a perfectly good tire that has either been distributed illegally or been imported illegally. In the former case, it may be a tire designed for U.S. highways but since it has been improperly sold, it will not carry the warranty of a tire obtained through proper sales channels. In the latter case, the tire will be just as illegal and won’t carry a manufacturer’s warranty. On top of that, it may not perform correctly or fully—not because it lacks quality but because it was not designed for use on U.S. vehicles.
AGMA says that gray market products are “shopped” globally and move through multiple tiers before reaching an end user. The group notes tactics that foster gray marketing include abuse of discount programs, fraudulent or falsified contracts or end user information. Other practices include over-ordering on valid accounts with discounts and selling those products in a manner not permitted by contracts or program terms and conditions. Inappropriate disposal of excess or obsolete inventories also feed the gray market.