The Firestone Tire Controversy

THE FUTURE OF FIRESTONE AND FORD Cont...

The recall of 6.5 mn Firestone tires on the Ford Explorer in August 2000 cost Ford about $ 500 mn. In 2001, Ford was expected to take a $ 2.1 bn after-tax charge to replace 13 mn more Firestone tires. Explorer sales had plunged 21% in 2001. The company's earnings were expected to sink by 65% in 2001 to $ 2.3 bn. Ford's share of the US automobile market had fallen by 1.7 percentage points in 2001 to 23.1%.

Nasser felt that the future of Ford (Explorer) would depend on how customers responded to Ford's reaction to the crisis. Said Nasser, "My message to consumers is, if you don't think we have behaved in the way the world's leading consumer company should behave, then tell us, because we want to earn that loyalty and respect.^[7]" Commenting on Ford's future relationship with Firestone, Nasser said, "Given the importance of the relationship between tires and vehicle safety, and the importance of brand perception, how can you put Firestone tires on the new Explorer that comes out next January?^[8]"

EXHIBIT I DEATHS AND INJURIES RESULTING FROM FIRESTONE TIRE FAILURES IN US (AS ON FEBRUARY 6, 2001)

Source: complied from various sources

EXHIBIT I I

As on February 6, 2001.

^[7] Fortune, September 18, 2000.

^[8] Fortune, September 18, 2000.

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