WASHINGTON (Aug. 20, 2002) — Continental Tire North America Inc. is voluntarily recalling more than 595,000 P275/60R17 Continental and General brand tires, most of them original equipment on 2000 and 2001 Ford Expeditions and Lincoln Navigators.
The tires—all manufactured between March 1999 and October 2000, and sold under the Continental ContiTrac AW and General Grabber AW brand names—aren't performing up to company standards after two years of service, Conti told Ford Motor Co. and the National Highway Traffic Safety Administration.
Approximately 60,000 of the tires are in the replacement market, Conti said in an Aug. 19 press release. The OE tires among them were on 106,721 Expeditions and Navigators. They all have DOT codes ranging from 109 to 4400.
The company estimates the cost of the recall at $30 million, according to an Aug. 20 press release from investment house Morgan Stanley.
“The voluntary recall we are announcing today shows how Ford and Continental early warning/quality systems work together and why we are at the forefront of testing, data analysis and responsiveness,” said Mark Sowka, Conti vice president-original equipment, in the release.
Conti first noted “an increase in significantly valued property damages and some personal claims” involving the ContiTrac and Grabber tires in April 2002, according to the notification document the Charlotte, N.C.-based tire maker sent NHTSA.
Between April and July, the company received notice of 18 property damage and personal injury claims involving the tires. There also was an “informal” report of a fatal accident involving a vehicle equipped with Grabber tires, but Conti had not yet discovered whether the tires contributed to the crash.
Conti began an investigation of the tires July 12, analyzing cross-sections of new and returned tires as well as warranty, property damage and injury claims. Based on its findings, the company decided to recall 596,610 tires, it told the agency.
During the same investigation, Conti determined that ContiTrac and Grabber tires made after October 2000 were free of the problems that affected the recalled tires. The company “made modifications to the tires' specifications beginning with tires built in November 2000 as part of continuous product development.”
A recall of OE tires on Ford sport-utility vehicles—echoing as it does the massive Firestone/Ford Explorer recall of August 2000—could hurt Conti's aftermarket tire sales, analysts said, although the company also helped its case by recalling the tires promptly.
“It is not helpful to have a recall, because it creates the perception of an issue of quality,” said Nicolas Hirth, an analyst with Morgan Stanley in London. “Of course, if there is an issue of quality, it's better to address it sooner rather than later. Conti is doing the best it can to make sure its reputation for quality is as high as that of, say, Michelin.”
Morgan Stanley is maintaining its “Overweight,” or recommended, status for Conti stock, according to its press release.
Conti said it will replace the tires free of charge with Ford's cooperation. Besides notifying owners of the tires via letter, the company will also maintain a toll-free hotline on the recall, 1-800-TIRE-FIX; an e-mail address for questions and answers on the recall, [email protected]; a link about the recall on its Web site, www.contigentire.com; and whatever additional steps NHTSA might recommend.
Conti officials could not be reached for further comment, and a Ford spokesman deferred all comment on the recall to the tire maker. Meanwhile, Conti remains a major OE supplier to Ford; at the beginning of August, Ford and Conti announced that P225/70R15 ContiTrac tires would be OE on nearly half of 2002 Ford Ranger pickups, and also were specified for 2003 models.
In a separate action, Conti also announced the recall of 3,505 Conti 315/80R 22.5 154/150MHSR1 bus tires manufactured between September 2001 and June 2002. The company will notify affected customers and replace the tires free of charge, it said.