Ford
Motor Co. today published the following document giving the company’s view
of a number of the issues surrounding its dispute with Firestone over Explorer
SUV tyres:

Myths
& Facts About the Explorer

Myth: SUVs are unsafe because they roll over. SUV owners would be better
off driving cars.

Fact: That’s false. Advances in safety technology have made all types
of passenger vehicles safer than the vehicles on the road a generation ago.
And Ford’s analysis of federal and state government safety data shows that,
overall, SUVs are even safer than passenger cars. That’s because SUVs are involved
in fewer accidents – SUV drivers often have better lines of sight and SUVs are
more visible to other drivers. Also, SUV occupants are often better protected
when they are involved in collisions.

Although SUVs are involved in more rollover crashes than passenger cars, there
is a greater risk of fatality in a passenger car in frontal, side and rear impacts.
As a result, SUVs are safer overall.

SUVs do handle differently. That is a key reason that the different handling
characteristics are printed on a label appearing on the visor of every SUV all
automakers build.

Leading edge safety technology available later this year on the 2002 Ford Explorer
– including AdvanceTracTM electronic stability control and Ford’s new Safety
CanopyTM – will further reduce the risk of a rollover and serious injury or
death if a rollover accident occurs. But a buckled safety belt is still the
best and primary line of defense for any adult occupant in a serious accident.
Children should of course be in the proper restraint system (child seat, booster
seat, etc.) until they are large enough to use adult safety belts.


Strategic
Review-


Ford


Myth: The Ford Explorer is more prone to roll over than other SUVs.

Fact: Not true. Ford’s analysis of safety data from the U.S. Department
of Transportation confirms that over the past 10 years Explorer consistently
ranks among the safest vehicles in its class. The fatality rate for passenger
cars is 1.5 per 100 million miles of vehicle travel. The rate for compact SUVs
is lower – 1.3. And the Explorer is even lower at 1.1.

Focusing on rollover accidents alone, the Explorer is safer than competitive
SUVs. Ford analysis of government safety data reveals that the Explorer line
is involved in 19 percent fewer fatal rollovers than other similar SUVs. And,
state safety data, which covers fatal and non-fatal rollovers, show that Explorers
are involved in 16 percent fewer rollovers than competitive SUVs.

Myth: Ford launched this tyre replacement effort to shift blame away
from the Explorer. Something is wrong with the Explorer, but Ford wants people
to think it’s just a tyre issue.

Fact: Not true. Ford Motor Company is replacing these tyres because
its number one priority is to ensure the safety of our customers and their families.
Ford’s concern is the Wilderness AT tyre. The facts are as follows:

First, Ford fitted both Firestone tyres and Goodyear tyres on Explorers beginning
in 1995 and through the 1997 model year. And the difference in performance is
dramatic. For the roughly 3 million Firestone tyres equipped on about 500,000
Explorers, Firestone’s own claims database shows that there have been 1,183
claims of tread separation. For the 3 million Goodyear tyres on another 500,000
Explorers (that have travelled more than 25 billion miles), there have been
only two minor claims of tread separation according to claims information supplied
by Goodyear. The performance on the Firestone AT tyres on Explorer is 600 times
worse than Goodyear tyres on Explorer. This remains the only apples-to-apples
comparison in this issue. If the vehicle was the issue, or at the very least
a contributing factor, the tread separations between the Firestone and Goodyear
tyres would be in the same ballpark. They are not even close. That’s why Ford
is replacing the Firestone Wilderness AT tyres.

Second, when Ford engineers tested the Wilderness AT tyres over the past nine
months, they found that the tyres were more sensitive to stresses and consistently
failed at higher rates, at lower speeds and lighter loads than other tyres tested,
including the Goodyear tyres used on Explorer.

Third, the failure rates of Firestone Wilderness AT tyres differ dramatically
based on the plant in which they were made. If the vehicle were the cause of
these separations, the tyre plant location would not make a difference in rate
of tread separations reported.

Finally, Firestone CEO John Lampe testified last year before Congress under
oath and said the following: "We made some bad tyres and we take full responsibility
for those." When a Senator asked, "Are bad tyres equated to be tyres
that have defects of some kind," Mr. Lampe responded, "Yes, sir."

Myth: The Firestone tyres performed far better on the Ranger than the
Explorer. That’s proof that the Explorer is part of the reason for these tyre
failures.

Fact: The tyres have performed better on Ranger, however the Firestone
tread separation claims on Ranger are still higher than average. And, importantly,
the Firestone tread separation claims on Ranger are higher than Goodyear claims
on Explorer.

In the June 11, 2001-dated issue of Business Week, Brian O’Neill, president
of the Insurance Institute for Highway Safety, was asked about the Explorer-Ranger
comparison. He said, "It’s an apples-to-oranges comparison that has no
validity in my opinion."

Ford agrees with Mr. O’Neill. Tyres used on any SUV perform differently compared
with tyres installed on a pickup. The two vehicles are used differently. SUVs
typically weigh more, and frequently are more heavily loaded, putting more stress
on the tyres. A sensitive tyre, like we have discovered with the Wilderness
AT, will not perform as well under these conditions.

Nevertheless, the larger-than-average numbers of tread separation claims for
Firestone tyres on Rangers are proof – proof that these tyres should be replaced.
This is why Wilderness AT tyres on Ranger are part of Ford’s replacement campaign.

Myth:
Even if the Explorer does not cause the tread separation, it certainly is more
likely to roll over as a result of the tread separation.

Fact: Not true. Ford has conducted many tests comparing Explorer with
competitive SUVs and we have shared our findings with the National Highway Traffic
Safety Administration. By inducing a tread separation at speeds approaching
70 mph on Explorer and competitive vehicles, with various load conditions, the
Explorer’s performance before, during and after a tread separation was found
to be typical of other SUVs. This exhaustive study was shared with NHTSA and
Firestone in March 2001.

The real-world accident experience shows when a Firestone tyre separated on
an Explorer, a rollover accident occurred on average less than 7 percent of
the time. This information is based on Firestone’s own claims data. Government
data show Explorer and competitive SUVs have similar rollover experience in
tyre-related accidents. Unfortunately, Firestone tyres on Explorer have separated
with far greater frequency than tyres on other SUVs and, of course, Goodyear
tyres on Explorer. The two known Goodyear tyre separations, out of about 3 million
Goodyear tyres in service on Explorers over the last six years, did not result
in any accidents, rollovers or injuries.

Myth: Safetyforum says that when tyres fail on Explorers the results
are four times more likely to produce catastrophic rollover than when they fail
on other SUVs.

Fact: Ford’s analysis of government data show that the Explorer has
a considerably better safety record than other SUVs both in terms of fatal crashes
and fatal rollover crashes. Safetyforum is misinterpreting data by using unverified
reports for a variety of manufacturers. It’s also misleading because it compares
the Explorer to all light trucks and not just competitive SUVs.

Ford and the U.S. government use tyre makers’ claims data, not this collection
of unverified reports. Even Safetyforum, which is a plaintiff’s attorney resource
organization, says they do not take into account the tyre model in their analysis.
The fact is that Ford’s testing shows Explorers perform like other SUVs before,
during and after a tyre tread separation, and real world safety data show that
Explorer is among the safest vehicles on the road year after year.

Myth: Internal memos show that Ford knew about the instability of the
Explorer years ago and did nothing.

Fact: That’s just plain wrong. The Explorer team sought to develop a
safe vehicle, recognising that safety performance among the leaders in its class
would help it to become the sales leader. And that’s just what they accomplished
– over the past 10 years Explorer consistently has ranked among the safest vehicles
in its class based on Ford’s analysis of the Federal government’s real world
database of crash statistics. And Explorer has been the best-selling SUV in
the world each year.

Memos from engineers working on the original Explorer show them working hard
to make it a safety leader, and sweating over small changes necessary for prototype
vehicles to pass Ford’s stringent internal safety tests that ensure safe, predictable
vehicle responses in severe "limit handling" manoeuvres. And yes,
from time to time, they debated among themselves in their search for the optimum
solutions. That is what our engineers get paid to do. If any version of those
prototypes didn’t pass every stringent test, changes were made until they did.
That’s exactly why prototypes are built. By the time the first Explorer was
driven by the first customer on a real road, the vehicle had passed all of Ford’s
internal safety tests.

Myth: Ford has spent a lot of time looking at tyres as the root cause
of the problem and has done little to evaluate Explorer handling due to tyre
separation and rollover. It seems odd that Ford has relied solely on government
data for its analysis.

Fact: While important, government data is not the only part of the evaluation
of the Explorer. On March 28 and 29, 2001, Ford presented NHTSA with an exhaustive
analysis of Explorer. (This technical analysis is available from NHTSA.) The
analysis included stringent on-road and computer-aided testing of the Explorer
and comparative SUVs in its class. The analysis dissected the performance of
every major component of the Explorer that has anything to do with ride and
handling, including emergency handling manoeuvres and tread separation of the
tyres. Contrary to recent Firestone charges, it is a fact that Firestone received
this thorough analysis from Ford on March 30, 2001.

The conclusion: Before, during and after a tread separation the Explorer controllability
is typical of comparative SUVs. Bring in the government’s data and these conclusions
are consistent in the real world where analysis of statistics from the U.S.
Department of Transportation shows that over the past 10 years Explorer consistently
ranks among the safest vehicles in its class. The fatality rate for passenger
cars is 1.5 per 100 million miles of vehicle travel. The rate for compact SUVs
is lower – 1.3. And the Explorer is even lower at 1.1. Likewise, focusing solely
on rollover accidents, the Explorer is safer than its competition. Government
figures reveal that Explorers are involved in 19 percent fewer fatal rollovers
than other competitive SUVs. The same is true for single-vehicle rollover accidents
– Explorer is safer than other similar-sized SUVs.

Myths
& Facts About the Firestone Tyres

Myth: Explorer’s 26 psi recommended tyre pressure is too low. That’s
why the tyres failed.

Fact: Not true. The 2.9 million Goodyear tyres performing at world-class
levels on Ford Explorers convincingly disprove this myth. The recommended tyre
pressure for the Goodyear tyres also was and, importantly, still is 26 psi.
Yet the Goodyear tyres are not showing the same tread separation problems. If
tyre pressure were really the issue, why isn’t it an issue for the Goodyear
tyres? In addition, the extensive analysis by Ford and Firestone’s independent
experts show that inflation pressure generally does not cause tread separations
on robust tyres unless the tyre is operated substantially below 26 psi.

Incidentally, the 16-inch Wilderness AT tyres in the replacement programme
have a recommended pressure of 30 psi. Ford’s analysis of Firestone’s latest
claims data (May 2001) showed increasing failure rates for the 16-inch tyres
similar to the failure rates of the 15-inch tyres made in the same plant.

Myth: Ford told Firestone to decrease tyre pressure to 26 psi so the
vehicle could pass Ford’s handling exercises and/or reduce the centre of gravity.
That increased the heat of the tyre and caused these tread separations.

Fact: Not true. Working with Firestone, Ford engineers selected the
recommended tyre pressure for Explorer to optimise numerous vehicle and tyre
characteristics including ride quality and handling. The tyre pressure selected
– 26 psi – is not unusual. Dozens of other competitive light trucks, SUVs, and
passenger cars run on similar sized (15-inch) tyres specified at 26 psi. Ford
did not recommend 26 psi to lower the Explorer’s centre of gravity, since tyre
pressure has nothing to do with a vehicle’s centre of gravity. A 4 psi decrease
(30 psi to 26 psi) lowers the centre of gravity by 90 thousands of an inch (about
the thickness of a nickel.)

As was said earlier, the 16-inch Wilderness AT tyres in the replacement programme
have a recommended pressure of 30 psi. Ford’s analysis of Firestone’s latest
claims data (May 2001) showed increasing failure rates for the 16-inch tyres
similar to the failure rates of the 15-inch tyres made in the same plant.

Myth: Firestone never agreed with Ford’s recommended 26 psi tyre pressure.

Fact: Firestone consistently supported Ford’s recommended inflation
pressure, at least until NHTSA opened its investigation in May 2000. In fact,
Firestone delivered tyres and paid warranty claims on those tyres, year after
year, under the 26 psi specification. In addition, the catalogues that Firestone
issued to its dealers and customers from 1993 through 2000 state that Firestone,
not just Ford, recommended 26 psi on the 15-inch tyres. Furthermore, Firestone
CEO Masatoshi Ono, told The Wall Street Journal on August 18, 2000, that "we
do not believe Ford’s recommendation of 26 psi [pounds per square inch] for
our tyres was a mistake." Firestone approved the 26 psi recommendation
in December 1989, prior to Explorer production. Goodyear also concurred in the
recommendation when Ford bought Goodyear tyres for Explorer.

Myth: Tyres cannot tell where they have been placed on a vehicle. Yet
most of the Firestone tread separations on Explorer occurred on the left rear
tyre. That’s a sign it’s the vehicle that is causing this.

Fact: False. Firestone claim data shows the same pattern for nearly
all trucks and SUVs. It’s consistent for GM and Daimler-Chrysler vehicles as
well as Ford vehicles – the rear tyres have more tread separation claims for
property damage or injury than the front tyres and the left rear tyre tread
separation claims outnumber the right rear tyre tread separation claims.

Myth: Ford knew, or should have known, last summer that the recall should
have been wider and are only now reluctantly replacing all the Wilderness AT
tyres.

Fact: Not true. Ford didn’t have all the information last summer that
it has today. Last summer, Ford’s review of the Firestone claims data showed
alarming failure rates for Firestone 15-inch ATX and Decatur-built 15-inch Wilderness
AT tyres. And so Ford urged Firestone to recall those tyres. The Firestone claims
data available to Ford at the time showed other Firestone Wilderness AT tyres
performing at world-class levels with no crashes, no rollovers, no injuries
and no fatalities.

Since last August, Ford has invested nearly 100,000 people-hours studying tyres,
testing tyres on rigs, pouring over field analysis and conducting tyre design
case studies. Then, after repeated requests, Ford obtained on May 11, 2001,
additional claims data from Firestone – another piece of the puzzle that confirmed
Ford’s research and analysis. That data showed significantly increasing failure
rates for some Wilderness AT tyres and raised serious questions about the long-term
durability of all of the non-recalled Wilderness AT tyres. Once it obtained
this information, Ford did not wait and took this preventive action to protect
its customers.

Myth:
Ford replaced the 16-inch Wilderness ATs overseas more than a year ago. That’s
proof Ford knew about the problem before last summer.

Fact: False. Ford had not, in fact, found the same failure pattern in
the U.S. as it had in the overseas locations where unique usage and environmental
conditions existed. Nor did Ford see the same failure pattern in the U.S. that
it saw overseas. However, more recently we have seen warning signs in the U.S.
that led Ford to take this action as a precautionary measure.

Myth: Ford should not have accepted "C" temperature-rated
tyres from Firestone. They are only tested to 85 mph.

Fact: The Firestone Wilderness AT tyres are, in fact, certified to 112
mph at full vehicle loads.

The confusion is that there are two different tests used to rate tyre characteristics.
One test, for temperature rating, is run on a test drum with huge loads placed
on the tyre — far greater than the tyres experience in the real world even
when the vehicle is fully loaded. The 85-mph threshold a tyre must pass on the
test drum to be certified actually translates to speeds significantly higher
in on-road usage by our customers.

A "C" temperature-rated tyre is an appropriate tyre for a vehicle
if the tyre is well manufactured and meets the performance criteria set by the
automaker. Tyres certified with a "C" temperature label have passed
a stringent government standard, and are therefore determined to be fully acceptable.
In fact, there are millions of "C" tyres on some GM, Toyota and Nissan
SUVs and light trucks and these tyres appear to have performed well.

There is a separate test that certifies tyres for a speed rating. This test
is run at higher speeds and full vehicle loads. All Wilderness AT tyres are
speed rated "S" and are certified to 112 mph, substantially higher
than the top speed of an Explorer.

Myth: The other companies are not replacing Firestone Wilderness AT
tyres on their vehicles. That means the tyres are fine.

Fact: That is a decision that the other automakers have to make. Ford
conducted extensive vehicle and tyre testing, analysed Firestone field data
and discussed findings with NHTSA. Ford concluded that there was a growing risk
of additional tyre failures in the future and decided to replace all Wilderness
AT tyres on Ford vehicles as a precautionary measure.

Other auto companies may be using different types of Firestone Wilderness tyres
having different specifications. It is interesting to note that days after supporting
their use of Firestone tyres, some of these manufacturers acknowledged that
they are replacing Firestone tyres on future vehicle production.


Strategic
Review-


Ford


Myths & Facts About Actions in Venezuela

Myth: The Explorer is still rolling over at high rates in Venezuela.
And they now have Goodyear tyres. That’s more proof that it’s not the tyre.

Fact: Absolutely false. For one thing, there has been no attempt to
make any connection between these accident reports and tyre failures. For another,
many of these reports of "Explorer rollovers" have actually been other
vehicles misreported as Ford Explorers. Other accidents mentioned include an
Explorer in heavy traffic that was rear-ended by a large truck and then sandwiched
between two heavy vehicles. The vehicle did not roll over, it was not in any
way a tyre-related incident and, thankfully, the occupants walked away with
only scratches. No one, including Firestone, should make claims or allegations
based on this data that is, at best, clearly flawed.

Newly obtained data from the Venezuelan transportation authority, SETRA, show
that most SUV accidents in Venezuela involve vehicles other than Explorers.
In the period 2000 to 2001, there were 701 accidents reported involving SUVs,
but only 9 percent involved Explorers.

This data involves both fatal and non-fatal accidents in ten Venezuelan states.
Two other competitors’ SUVs had more fatal accidents than Explorers in Venezuela.
The data was gathered and analyed from traffic reports in the SETRA records.

The fact is Explorer, in addition to being a very popular SUV in Venezuela,
has one of the safest records of any SUV in the country. Explorer’s safety record
in Venezuela is consistent with its performance in the U.S. where the DOT accident
data confirms that Explorer is among the safest vehicles in its class.

Myth: Venezuela may ban the sale of Explorer and that’s more proof that
it is a dangerous vehicle.

Fact: The misinformed accusations by one Venezuelan investigator, acting
on the flawed data mentioned above, does not change the fact that Explorer is
a safe vehicle. The investigator has failed to substantiate any of his theories,
which do not withstand any serious technical review. The Venezuelan National
Assembly established an independent Technical Commission to review the investigator’s
allegations. Ford has been working closely with the Technical Commission and
has shared its testing and analysis with them. This data and analysis disproves
the investigator’s allegations, including suggestions that electromagnetic interference
or aerodynamic turbulence were causing vehicle rollovers.

We would expect the Venezuelan governmental agencies to act responsibly, not
on a misrepresentation of hearsay.


To view related research reports, please follow the links
below:-

The
world’s car manufacturers: A financial and operating review

Global
tyre market intelligence set

The
automotive industry in Latin America: Mexico, Brazil and Argentina Forecasts
to 2005