May 26, 2007

The Beginning of the End of the SUV?

Decades of neglecting the rollover threat posed by Ford Explorers may end up having billion-dollar consequences for the automaker, reports the Sacramento Bee. On June 4, trial will begin in a Sacramento California Superior Court in a class-action suit claiming the automaker deceived customers about the safety of its Explorer models, and the damages may be large enough to bankrupt the automaker.

The claim is based on California’s unfair competition and false advertising laws, seeking damages and disgorgement of profits against Ford for marketing the sport-utility vehicle as a replacement for the quintessential family vehicle: the station wagon. Plaintiffs say Ford marketed the Explorer as safe and reliable despite Ford’s knowledge of the vehicle’s inherent rollover risk.

The value of Explorers owned inCalifornia depreciated $1,000 to $1,300 below normal levels after vehicle instability became widely publicized during the Ford/Firestone tire failures. Ford continues the blame faulty tire design for causing its SUVs to rollover, but if the jury is unpersuaded by this argument, Ford could be forced to pay $500 million in damages and an additional disgorgement of Ford’s $2.135 billion profits from California Explorer sales.

This marks the first such case to reach trial, although a similar suit is pending in Illinois.  The class of plaintiffs includes California residents who bought, owned or leased a 1991-2001 model-year Ford Explorer between 1990 and Aug. 9, 2000. Explorer drivers must still own their vehicle or must have sold it or ended their lease after Aug. 9, 2000. All qualifying residents are members of the lawsuit unless they opt out through the court’s Web site.