Firestone knew its 500 tire was defective — kept selling it until 250 people died

The Firestone 500 steel-belted radial tire was the company's answer to Michelin's revolutionary radial design. Introduced in the early 1970s and promoted as 'the longest running radial tire in America,' it became one of Firestone's best-selling products — and its deadliest. By 1973, an internal memo from Firestone's own director of development warned: 'We are making an inferior quality radial tire which will subject us to belt-edge separation at high mileage.' The company sold it for another five years before acting.

The defect was a bonding cement failure that allowed water to penetrate the tire and corrode the internal steel wires, causing the tread to separate from the carcass at highway speed — often resulting in high-speed crashes and rollovers. NHTSA's investigation concluded the problem was 'most probably a design defect affecting all Firestone 500s.' The tire was linked to 250 deaths. On October 20, 1978, Firestone recalled over 7 million Firestone 500 tires — the largest tire recall in history up to that time.

The financial and reputational damage was severe. NHTSA fined Firestone $500,000, then the largest civil penalty imposed under the National Traffic and Motor Vehicle Safety Act. Multiple lawsuits were settled out of court. Constant negative publicity crippled sales and share price. Firestone was losing vast amounts of money, its brand severely damaged. Top management was eventually replaced. The case became a business-school lesson in management misjudgment, taught at Harvard and Wharton.