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December 06, 2000 01:00 AM

Ford considers warranting its OE tires

Sherri Begin, Crain News Service
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    DEARBORN, Mich. (Dec. 6, 2000) — Five months of embroilment in the Bridgestone/Firestone Inc. tire recall has Ford Motor Co. considering its own warranty coverage of the original equipment tires on its vehicles.

    Other auto makers with U.S. operations say they may follow suit if Ford joins General Motors Corp. in including tires under manufacturer´s warranties.

    But for now, they continue to back most everything on the vehicle—except the tires.

    "Since tires are made to their (auto makers´) specifications, really, it only makes sense that they be at least partially responsible for the performance management of the tires," a Goodyear spokesman said.

    Goodyear has worked closely with GM on the administration of its tire warranties and now is working with Ford to come up with a viable plan, the spokesman said.

    By covering the tires, Ford would have access to warranty claims data that could forecast potential safety issues. Ford CEO Jacques Nasser said during the U.S. Senate and House hearings this fall on the Firestone tire recall that not having claims or warranty data from Bridgestone/Firestone was a large part of Ford´s difficulty in identifying the tires as defective.

    "If we were to warrant our own tires, we would be closer to the data, because we would be active in obtaining it, and...it would end the divide of everything being covered but the tires," a Ford spokesman said.

    From the car maker´s perspective, however, warranty data alone would not serve as a red flag to problems, the spokesman explained. "You would have to look at it holistically."

    Mr. Nasser, in an article published by Automotive News, a sister publication of Tire Business, said that "when you hear others say, `We have the warranty on tires,´ that is meaningless data. It is noise level. You need a comprehensive data input from customers that includes warranty, claims data, vehicle damage data, personal injury data, legal suits, everything."

    If Ford decides to take on warranty coverage of the tires, it would come in addition to two separate initiatives Mr. Nasser said the auto maker would undertake: notifying the National Highway Traffic Safety Administration immediately of all foreign recalls and customer satisfaction programs; and working with other tire makers, NHTSA and Congress to develop an "early warning system" to detect the first signs of tire defects.

    General Motors disagrees that warranty data itself isn´t enough to raise red flags. "I feel with our system we can learn of things much more quickly than if we didn´t warrant them," said Dick Gratz, GM quality assurance manager of Tire-Wheel Systems.

    "In my opinion, warranty data is 95 percent of the total field performance of the product...(and) the primary indicator of coming concerns."

    GM began covering the original equipment tires on its vehicles in Canada in 1990, and in the U.S. in 1995 with its Cadillac line before expanding it to all passenger vehicles and light trucks the following year.

    "When GM began warranting their own tires, we looked at it and determined that (it)...would not substantially increase customer satisfaction," the Ford spokesman said. "Whether that is true today is to be determined."

    General Motors made the decision to begin including tires under its three-year/36,000-mile warranties—at additional unspecified cost to the corporation—primarily for customer satisfaction reasons, Mr. Gratz said. Customers often were "ping-ponged" between the tire dealer and the car dealer as mechanics tried to identify the problem, he said. "And we didn´t want that."

    GM now administers the tire makers´ warranties on its vehicles, giving customers a "one-stop shop" for vehicle maintenance, should they prefer it to a secondary visit to a tire dealer. As part of its warranty, GM picks up the prorated co-pays its customers would have had to pay with the tire maker´s coverage after one year or 25-percent tread wear.

    Having access to claims numbers is "an added benefit," Mr. Gratz said, giving GM a first-hand look for possible problems and the opportunity to discuss them with its tire suppliers.

    To date, GM has not uncovered any serious tire safety issues in the warranty numbers, Mr. Gratz said—something he attributes to the stricter rolling resistance, ride, traction, handling and treadwear specifications GM sets forth in its Tire Performance Criteria.

    "We don´t tell them (tire makers) how to build the tire, but we tell them what the end product needs to be," he said. Those specifications mean GM can more comfortably warrant the tires on its vehicles, he added.

    Aside from helping to identify potential tire safety problems, the warranty data is helpful in identifying other vehicle performance issues like improper alignment and sensitivity to tire vibration, he said.

    "If something needs to be done to the vehicle or tire, we can respond much faster," Mr. Gratz said.

    And response time is crucial, said David Cole, managing partner and director of the Center for Automotive Research at the Environmental Research Institute for Michigan in Ann Arbor. "When the manufacturer gets the data, you´ve got it fast. You can begin to sense problems as a primary rather than a secondary," he said."

    Ford taking up tire warranties would put enormous pressure on other car makers to do the same, Mr. Cole said, because of the value consumers will associate with it. In terms of quality and price, most car makers are very competitive. "These kinds of things are what set them apart from the rest," he said.

    Picking up tire warranty co-pays and installing a new data system and management of it could well cost a car maker millions of dollars, Mr. Cole said. But the costs of what Ford and Bridgestone/Firestone have gone through—in terms of human lives lost, corporate reputation and monetary losses—because of a low-frequency problem justify it, he said.

    DaimlerChrysler A.G.´s OE tires still are warranted separately from the rest of the vehicle, a spokesman for the car maker said.

    A prime reason for this was best explained by a spokesman for its Mercedes North America division. Unlike all of the other Mercedes vehicle components which are "designed specifically, from start to finish, to fit (Mercedes) cars," tires are not covered under the manufacturer´s warranty because they are designed for a variety of vehicles, he said.

    "Right now our safety office is talking with both of our major tire suppliers, Goodyear and Michelin, to see what information they can provide to us on a regular basis on warranties, compliance and that sort of thing," DaimlerChrysler´s corporate spokesman said.

    The car maker also is waiting to see how the new federal tire safety legislation—which will require tire companies to provide that sort of information—is written, he said. As for warranting the tires itself, DaimlerChrysler has not made any public announcements.

    Transplant car manufacturers in the U.S. haven´t begun warranting OE tires, either, but say they are closely watching Ford´s actions on the matter.

    "When the two biggest car companies in America make that decision, we would look at it," a Toyota spokesman said.

    Car makers are beginning to realize that a vehicle´s performance is really dependent on the tires, Mr. Cole said.

    "The tire is such an important part of the integral performance of the vehicle that you can´t set it aside as a separate thing," he said.

    Another analyst, however, doesn´t believe auto makers will pick up tire warranties.

    Saul Ludwig of Cleveland-based McDonald Investments Inc. thinks primary warranty responsibility will stay with tire makers for the same reason it has traditionally.

    "Because tires are very specialized, highly engineered products...the tire companies are the ones best able to administer the warranties," he said.

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