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Is Tire Leasing Right For You?

Have you heard of tire leasing, and what it can do for your bottom line? 

Tire leasing has actually been around for a very long time. For example, Peter Pan Bus Lines is now in its 79th year leasing tires from Firestone. Yes, you read that right, 79th year. They started in 1939.

So what is tire leasing? The easiest way of thinking about leasing tires is to think of it as paying only for the miles you've actually driven on the tire.  For this reason, it is often called "mileage sales". Let's say you are paying 500 per tire, and there are 10 tires on your rig, and you expect them to last 100000 miles. So your rate per mile is $0.0050. If you drive 8400 miles per month, that's $42 per tire, or $420 a month. That's better than paying 5000 every year. This makes cash flow much more predictable and manageable. Furthermore, if you don't run, it doesn't cost anything.  

Most tire leases, however, cost more per mile as the tire providers usually include inspections, balancing, rotation, and air fill-ups. Bus tire leases typically have a rate in the $0.0065-0.0070 range for fleets as small as 30 vehicles. The leases, typically from fleet sales of Goodyear, Bridgestone, Michelin, and so on, have service support network all across the US. Some even include discounts on roadside assistance. 

The trucking industry had traditionally resisted the idea of tire leasing. The truck dealer service networks typically handle the tires as well, and most fleets do not need separate tire management.  Instead, tire leasing became popular with bus fleets, esp. regional transit agencies that do not want to maintain their own tire inventory, maintenance operation, and labor training. 

If you rely on your existing vendor for tires then there is no need to change. However, if you find the idea of a stable cash flow appealing, and you don't want to be bothered with tire maintenance and inventory, then you should look into tire leasing. 

Michigan Truck & Equipment is here to keep you on the road and watch out for your bottom line. If you need parts or service for your truck or looking into getting one, give us a call. 


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