Ford Pinto

The Ford Pinto

In the late 1960’s, there was a surprising demand for sub-compact vehicles on the automobile market. When Lee Iacocca became the President of Ford motor company, he quickly put into action his plans for making the Ford Pinto. With wanting the vehicle on the show room floors of America with the 1971 models, he ordered the shortest production planning period in modern automotive history. “The normal time span from conception to production of a new car model is around 43 months, the Pinto schedule was set in just under 25” (“The ford pinto”, 2010). Iacocca had very specific instructions for the making of the vehicle, “The Pinto was not to weigh an ounce over 2,000 pounds and not cost a cent over $2,000” (Time Magazine, 2010).

As production began of the vehicle, design flaws became apparent in the gas tank and its positioning. Internal documents show that the car was crash tested, and in rear impact collisions, the fuel tank would be punctured, causing the gas to leak and a fire to ensue. “The ford was crash tested more than 40 times and every test made over 25 mph without special structural alteration of the car had resulted in a ruptured fuel tank” (Ford Pinto, 2010). In articles on the subject of the knowledge that Ford had of the problems before the car became for sale, workers admit to not informing Iacocca of them, for fear of being fired. Although Iacocca was stated to not know, a Cost-Benefit analysis was prepared. “The Ford Motor Company issued this memorandum: “Fatalities Associated with Crash-Induced Fuel Leakage and Fires”:

Benefits

Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles

Unit Cost: $200,000 per death, $67,000 per injury, $700 per vehicle

Total Benefit: 180 x ($200,000) + 180x ($67,000) + $2,100 x ($700) = $49.5 million

Costs

Sales: 11 million cars, 1.5 million light trucks

Unit Cost: $11 per car, $11 per truck

Total Cost: 11,000 x ($11) + 1,500,000 x ($11) = $137 million...