Ford Motor Co.
) has identified the main reason of engine overheating problem in
its latest recall of 2013 SE and SEL models of redesigned Escape
SUVs and Fusion midsize sedans that are equipped with 1.6-liter
The company has revealed that the problem was mainly caused by a
software glitch in the engine cooling system, which was supposed
to handle a loss of pressure under certain conditions that could
lead to vehicle fire while the engine is running. As a result,
the company has decided to update the software in the affected
On November 30, Ford announced plans to recall 89,153 vehicles in
the U.S. and Canada that include 73,320 units of Escape and
15,833 units of Fusion. The company has received reports of 12
fires in Escapes and one in a Fusion. However, none has been
injured due to the problem till date.
Ford plans to deliver the cooling software update to its
customers through its dealers early next week. The company has
advised the customers to contact its dealers for a free
replacement vehicle until the software is updated.
The redesigned Escape went on sale last spring with a price tag
of $22,470 and came under the scanner of safety regulators
several times that indicate quality problems in manufacturing.
However, Ford has a different take on the issue highlighting how
fast it is resolving the safety issue of the vehicles.
In July, Ford had recalled 11,500 Escape SUVs for fixing fuel
lines leak that can cause fires. In the same month, the company
had said that it would recall 8,266 units of the SUV in order to
fix their improperly installed carpet padding that could cause
braking failures. In September, it again recalled 7,600 units of
Escape in order to fix coolant leaks that can cause engines to
overheat and may lead to fire.
Apart from the redesigned version, Ford had also recalled the
prior model of Escape in late July. The automaker had recalled
485,000 units of old Escapes in the month due to sticking gas
pedals that can cause crashes.
Year-to-date, Ford has sold nearly 220,000 units of Escape and
207,000 units of Fusions, according to Autodata Corp. The figures
include both the old and new models having different engines.
Automotive safety recalls were brought into focus by media after
) announcement of the largest-ever global recall of 3.8 million
vehicles in September 2009, triggered by a high-speed crash that
killed 4 members of a family.
Later on, a string of recalls has led Toyota to face numerous
personal injury and wrongful death lawsuits in federal courts.
The Transportation Department of U.S. also imposed a fine of
$48.4 million on the company due to late recall of millions of
Ford, a Zacks #3 Rank (Hold) stock, posted a 17.6% rise in
earnings per share to 40 cents in the third quarter of the year
from 34 cents a year ago, driven by impressive results in its
North American operation and, to some extent, its Asian
operation. With this, the company has also beaten the Zacks
Consensus Estimate by 10 cents per share. Total profit rose 15.6%
to $1.6 billion from $1.4 billion a year ago.
However, total revenue in the quarter slid 3.0% to $32.1 billion
due to lower revenues in South America, Europe and Financial
Services operations that offset the marginal improvement in
revenues in North America and Asia. However, revenues were higher
than the Zacks Consensus Estimate of $31.0 billion for the
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