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Personal Finance > Your Home
How tire recall affects you
May 22, 2001: 2:09 p.m. ET

Consumers and investors can suffer or gain from Ford/Firestone spat
By Staff Writer Mark Gongloff
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NEW YORK (CNNfn) - In the messy divorce of Ford Motor Co. and Firestone, consumers and investors could suffer -- or gain -- the most.

With Ford set to recall at least 10 million more Firestone Wilderness AT and ATX tires, Firestone severing its ties with Ford after nearly a century of doing business, and each company accusing the other of making faulty products, who can consumers believe?

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"There's no reason not to believe both of them in this instance," said Ralph Hoar, executive director of Safetyforum.com. "The tires are faulty, regardless of where they're made or what size they are, and should be taken off any vehicle as soon as possible.

"And there's special urgency if they're on Ford Explorers because our analysis shows Explorers are four times more likely to roll over when tires fail than any other sport/utility vehicle," Hoar said."

Federal safety regulators have identified more than 100 deaths from accidents tied to the rollover of Ford vehicles equipped with Firestone tires that suffered from tread separation.

Some 6.5 million Firestone tires were recalled last year, including the company's 15-inch ATX and 15-inch Wilderness AT tires made at a plant in Decatur, Ill. Industry sources say Ford plans to demand Tuesday that Firestone conduct another, more widespread tire replacement program.

Firestone also said Monday it will end a business relationship with Ford that extended 95 years, saying Ford is ignoring safety problems with its Explorer vehicle. Ford said its analysis shows the problem is due to faulty tires.

Click here for more on the tire recall

Hoar said Safetyforum.com, a consulting firm that assists trial lawyers in suing auto makers, studied 3,533 reports from the U.S. government's National Highway Traffic Safety Administration (NHTSA) Firestone investigation database and found that tire failures on Explorers caused rollovers 13 percent of the time, whereas tire failures on other SUVs caused rollovers only 3 percent of the time.

"The point is that Ford once again is looking to tires to solve the stability problems with Explorer," Hoar said.

But the fault is not Ford's alone, Hoar said. "Regardless of the vehicle these tires are on, they should come off."

According to Hoar, Ford owners should get their Ford dealership to replace Wilderness AT and ATX tires. If the dealership can't do it right away, Hoar said, consumers should get a tire retailer to do it, and they should save their receipt and seek reimbursement from Ford.

Hoar said owners of vehicles other than Fords should get a tire retailer to replace their Wilderness AT and ATX tires. They should save their receipts and tires and seek reimbursement from Firestone, Hoar said, should Firestone become part of a tire recall.

"We believe the government will order Firestone to (recall the tires) if they don't do it of their own accord," Hoar said.

Maintaining tire safety

Consumers who aren't ready to return their tires should at least make sure their tires aren't about to blow out, according to Consumer Reports, which has made several tire-safety tips available online.

David Champion, the director of automobile testing for Consumer Reports, said these tips aren't just for owners of Firestone tires.

"Blowouts occur on all manufactures of tires," Champion said.

Check tire pressure regularly. In the old days, tires didn't last long and were more prone to blowouts, which forced drivers to keep a closer eye on tire pressure. "Modern tires are so good in many ways that people have stopped checking pressure like they used to," Champion said. Drivers should make sure their pressure is kept to the car manufacturer's standards, not the tire maker's standard.

Inspect tire for damage and tread depth. When checking tire pressure, inspect the tire for cracks, bulges and other signs of damage. Also make sure the tread is at least 2/32 of an inch deep -- about the distance between the edge of a penny and the top of Lincoln's image on the penny, according to Consumer Reports.

Lighten your load -- and your lead foot. "Three things heat a tire up: low inflation, high load and high speed," Champion said, and a hot tire is more prone to blow out. Make sure you aren't carrying more than your car is designed to carry, and keep your speed at or below the legal limit.

"But if tire pressure is correct, heat won't be a factor," Champion said.

Other safety tips include making sure you have a working spare tire and keeping your wheels properly aligned.

Impact on investors

The Ford/Firestone fiasco also could have an impact on investors. Shares of Firestone competitors Goodyear Tire & Rubber (GT: up $2.16 to $30.40, Research, Estimates) and Cooper Tire & Rubber Co. (CTB: up $0.39 to $12.39, Research, Estimates) both were benefiting from Firestone's misery in Tuesday trading.

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"Clearly, this is bad news for Firestone," Merrill Lynch analyst Steve Haggerty said. Haggerty pointed out that Goodyear and Cooper both picked up market share after last year's Firestone recall, and the latest news could even have a positive impact on Goodyear's earnings beginning in the third quarter.

Ford (F: down $0.67 to $25.98, Research, Estimates) shares, meanwhile, were down only slightly.

"We think the damage to the (Ford) brand has already been done," said Merrill Lynch analyst John Casesa, who thinks Ford's stock should rebound after investors digest the news.

Click here to check other auto stocks

Other analysts weren't so sure.

Morgan Stanley Dean Witter analyst Stephen Girsky said another recall will cost Ford money, and the end of its relationship with Firestone means it will have to pay more for tires than other manufacturers. Ford's product liability costs also should rise, Girsky said, and its standing in the public eye should fall.

"This is another blow to Ford's reputation," Girsky said. graphic

  RELATED STORIES

Ford expected to seek a broader Firestone tire recall - May 22, 2001

Firestone says it won't sell to Ford - May 21, 2001

Special report: Ford Firestone recall

  RELATED SITES

Bridgestone/Firestone

Ford

Safetyforum.com

NHTSA


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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.