Businessweek Archives

Would You Buy An Explorer?


News: Analysis & Commentary: Crisis Management

Would You Buy an Explorer?

Customers are pelting dealers with safety questions

Throughout much of the monthlong controversy over deadly accidents involving failures of Firestone tires on Ford Explorers, Ford Motor Co. has managed to deflect most of the blame and pin it squarely on the tire manufacturer. But as government officials continue their safety probe, Bridgestone/Firestone Inc. has finally begun to fire back: It's not just the tire, it's also the vehicle. "We made some bad tires. We take responsibility for that," Firestone Executive Vice-President John Lampe told a Senate committee on Sept. 12. But "the interaction between the tire and the vehicle should be the focus."

The problem, according to Lampe: Explorers have a tendency to roll over. In his testimony, he noted that Explorers had been involved in 16,000 rollover accidents since the model was introduced 10 years ago, but less than 10% of those accidents involved tread separation of Firestone tires. This wasn't news to safety advocates and plaintiffs' lawyers who had been challenging the Explorer's stability even before Firestone announced a recall of 6.5 million tires on Aug. 9.SHYING AWAY. But what about Ford Explorer owners? Up until now, the moderate-size sport-utility vehicle has had a large, loyal following that has made it the best-selling SUV for the past 10 years. Even after the scandal broke in August, Explorer sales seemed to be holding up relatively well, considering the slowing economy, tougher competition, and the prospect of a new model Explorer hitting showrooms next March. Now, however, as debate about safety intensifies, the brand's immense popularity will be tested. The $64 million question for Ford: Will consumers start to shy away from the Explorer?

Dealers say they're getting pummeled with questions about the tire recall, and in some cities, up to 40% of customers are demanding different tires before they'll agree to a deal. Nationally, however, only 10% of buyers are asking for non-Firestone tires.

Still, Explorer sales for August were down only 0.8% from a year ago, according to Ford. And on Sept. 15, Ward's Automotive Reports is expected to report that Explorer inventories for the month were up slightly, from a 59-day supply to 65 days. Analysts also say September sales appear to be running on a par with year-ago figures. Admittedly, this is off the hot pace set through July, when they jumped 14%. But the company and analysts attribute at least part of that slowdown to the economy and the stepped-up incentives being offered on rival Jeep Grand Cherokees and Chevrolet Blazers--which went unmatched by Ford.

Indeed, given all the bad publicity, Ford officials say they are delighted that consumers are still buying Explorers at such a healthy rate. "It wasn't like they all arrived from another planet and hadn't heard about the recall," says George Pipas, Ford's manager of sales analysis. Pipas notes that the Explorer is facing competition from its own new compact, the Ford Escape, just hitting showrooms now. Some potential customers are also waiting for March, when the 2002 Explorer model appears, Pipas adds.TURNED OFF. Dealers claim they can't get enough Explorers. At Briarwood Ford in Saline, Mich., "inventory is our largest problem," says sales manager Jeff Russell. That situation should only get worse in October because of Ford's decision to close down its two Explorer plants and another light-truck factory for three weeks to free up replacement tires for the recall.

Still, not everyone is so optimistic. A CNN/USA Today Gallup poll found that 12% of American consumers who might have bought an Explorer in the past would no longer do so, and a further 32% surveyed would reconsider their decision to buy. Dealers have also found a need to sweeten the price to entice would-be buyers. To keep Explorers rolling off the lot at Framingham Ford in suburban Boston, dealer Jerry K. Chase Jr. has doubled rebates, to $2,000 a vehicle. "We're being a bit more aggressive with discounting," Chase says. Fort Worth dealer Cliff Johnson ordered dozens of Explorers in anticipation of strong sales this fall, but now worries that the media frenzy will ruin his business plan. "We could be stuck with them," says Johnson, owner of Texas Motors Ford. "It's too early to tell."

With all the current pressures from the scandal, not to mention the economy and rivals, Explorer sales are very likely to lag in the coming months. But Prudential Securities analyst Michael Bruynesteyn argues that this will probably be a short-term problem, however. He also says that the company will soon have an all-new Explorer to sell and that this vehicle probably won't have the stigma of the current one. The new version, which goes on sale this March, is longer, wider, heavier, and has independent rear suspension--all of which will reduce the chance of a rollover, according to George Peterson, president of AutoPacific Inc., an automotive consulting company in Tustin, Calif. The new SUV will also have improved traction control and rollover sensors that deploy new side-curtain air bags from the ceiling to protect passengers' heads and help prevent them from being ejected from the sides of the vehicle. "Check all the boxes for design changes that reduce rollover," says Peterson, "and they've done it."

That's not the only change. Ford has enlisted France's Group Michelin to supply some tires for the new Explorer, and the company is negotiating a deal with Goodyear Tire & Rubber Co. to do the same.

New design. New tires. Clearly, the aim is to put a whole new face on this popular brand. The question is whether that will be enough to erase any lingering doubts about the old.By Joann Muller, David Welch, and Jeff Green in Detroit, and Bureau ReportsReturn to top


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus