By TIMOTHY AEPPEL and KAREN LUNDEGAARD
Staff Reporters of THE WALL STREET JOURNAL
A group including about 40 state attorneys general joined forces to aid
their investigations into the handling by Bridgestone/Firestone Inc. and
Ford Motor Co. of a massive automobile-tire recall linked to 101 deaths.
The group began forming during a conference
call a week ago, and the chief legal officers from
about 40 states participated in the most recent
call, according to people familiar with the
Separately, Automotive Lease Guide, the bible for valuing new-vehicle
leases, has downgraded the value of the Ford Explorer, in part because
of the recent tire recall but also because it and other popular
sport-utility vehicles are fetching lower prices in an oversaturated
The guide's action could result in more-expensive leases on SUVs or
higher incentive costs for auto makers, since the ALG's values are
widely-followed benchmarks for setting lease terms for new vehicles.
Todd Boyer, a spokesman for Ohio Attorney General Betty
Montgomery, said cooperative efforts are common when a number of
states are "gathering, processing and issuing demands for information
from corporate entities." He said it would be a mistake to characterize
the group as forming a single investigative body.
But clearly, the creation of such a network could facilitate each state's
formal investigations. It also means Bridgestone/Firestone, a unit of
Japan's Bridgestone Corp., and Ford, of Dearborn, Mich., wouldn't have
to deal with dozens of state requests, which could slow the release of
data and prolong discovery. The states are expected to divvy up
responsibility for gathering different kinds of information and to
coordinate its flow. Some of the states, including South Carolina,
already have filed suit in connection with the recall. Others have
indicated that they haven't ruled out such action.
Federal investigators have
linked 101 deaths to tread
separations on Firestone
Wilderness AT, ATX and ATX II
tires, and many of those
fatalities allegedly occurred
when tires failed on Explorers
and caused the vehicles to roll
over. Both Ford and Firestone
have been criticized by
members of Congress,
consumer groups and plaintiffs
lawyers for failing to respond
soon enough to evidence of
problems with the recalled
John Lampe, executive vice president for Bridgestone/Firestone, said
the company was informed by Tennessee Attorney General Paul G.
Summers that a "multistate working group" has been formed. Mr.
Lampe said the tire company would be meeting with the group later this
week and "will be open and fully cooperative ... in sharing data and
other background.'' A spokeswoman for Mr. Summers said "this is a
working group. I couldn't tell you whether we're contemplating a
Mr. Lampe also took the opportunity to make sure the group was going
to look at Ford as well as Firestone. "We continue to believe that, in the
interest of public safety, the search for answers should focus on both
the vehicle and the tires," he said.
Susan Krusel, a Ford spokeswoman, said the auto maker isn't aware of
any inquiry by a multistate group of state attorneys general. She said
Ford has been contacted by the offices of attorney generals from seven
states -- Florida, Connecticut, Georgia, Maryland, Ohio, Tennessee and
California -- and is complying with their requests. "Certainly, we have
cooperated with government officials on this investigation to date, and
we intend to cooperate with state attorneys general as well to fulfill their
information needs," she said.
According to information received by Bridgestone/Firestone, those in
the multistate working group are: Alaska, Arizona, Arkansas, California,
Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa,
Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New
Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South
Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West
Virginia and Wisconsin, as well as the Commonwealth of Puerto Rico.
In the Automotive Lease Guide's most recent pricing schedule, the
Santa Barbara, Calif., research company hit Ford's Explorer with a
double whammy. The vehicle's projected residual value -- how much it is
predicted to fetch after being leased -- has sunk six percentage points
since last year, shaving $1,850 off the price when an Explorer comes off
lease. One-third of the decline is specifically due to the Firestone tire
recall, says Raj Sundaram, vice president at ALG.
But Mr. Sundaram had a sobering message for other auto makers in the
SUV segment: The vehicles' values "have definitely peaked." The supply
of used cars has increased, he said, and rising incentive spending on
new vehicles has softened used-car values.
Residual values have plummeted by about 15% since 1997 on full-size
SUVs and 14% on compact SUVs, according to the lease guide.
Write to Timothy Aeppel at email@example.com and Karen
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