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September 02, 2002 02:00 AM

Conti recalls tires on Ford SUVs

Miles Moore
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    Continental Tire North America Inc. is voluntarily recalling 596,610 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 company estimates the cost of the recall at $30 million, according to an Aug. 20 press release from investment house Morgan Stanley.

    The company's recall was based on findings generated through its ``early warning'' system that monitors the real-world performance of tires for possible defects, said Mark Sowka, Conti vice president of original equipment, in a phone interview from Conti headquarters in Charlotte, N.C. Mr. Sowka, however, hastened to say that there was nothing specifically wrong with the tires.

    ``Through our early warning system, we had a very early indication of performance that was not up to company standards,'' he said, adding that vibrations and irregular wear were the two main complaints Conti received about the tires. ``We want to be very early and quick in our response.''

    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 tire maker sent NHTSA.

    Between April and July, the company received notice of 18 property damage and personal injury claims involving the tires. There was also an ``informal'' report of a fatal accident involving a vehicle equipped with Grabber tires, but Conti had not yet discovered whether the tires helped cause 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.

    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 email 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.

    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 315/80R22.5 154/150MHSR1 bus tires manufactured between September 2001 and June 2002.

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