Ford Motor Co.
) plans to recall 5,500 units of midsized sports utility vehicles
(SUVs), Edge, in order to fix their defective fuel lines that could
potentially cause fire. The recall will cover the vehicles that are
equipped with 2-liter engines and manufactured between September 2,
2010, and October 31, 2011.
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Ford revealed that fuel lines in the 2012 model year vehicles could
crack due to faulty manufacturing by a parts supplier. The crack
could result in fuel leak, ultimately leading to fire.
As of now, Ford has received 12 reports of fuel leakage from the
owners of Edge. However, none of them led to injuries or fires.
Ford will begin notifying the owners of the vehicles to take them
to the nearest Ford or Lincoln dealer. If the problem is detected,
the dealers will repair the vehicles free of cost. The recall would
begin on September 24.
This is the fifth recall of Ford in about 2 months, 3 of them
related to problems causing fire (including the latest recall of
Edge). In July, the company 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.
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.
At the beginning of this month, Ford also announced recall of 7,600
units of its recently launched Escape compact SUVs in order to fix
coolant leaks that can cause engines to overheat and may lead to
fire. The redesigned Escape SUVs are the company's second-best
selling vehicle after F-Series trucks.
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 defective
Ford, a Zacks #3 Rank (Hold) stock, posted a 39% fall in profits of
$1.20 billion or 30 cents per share in the second quarter of the
year from $1.98 billion or 49 cents in the corresponding quarter of
2011 due to lower operating results in all the regions except North
America. However, the company's profits were higher than the Zacks
Consensus Estimate of 28 cents per share.
Revenues in the quarter dipped 6% to $33.3 billion, due to the same
factors mentioned above. However, it exceeded the Zacks Consensus
Estimate of $32.0 billion. In the first half of the year, Ford's
U.S. total market share was 15.4% in the U.S. and 8.1% in Europe.
For 2012, Ford anticipates market share in the U.S. and Europe to
be lower than 16.5% and 8.3%, respectively in 2011. It also expects
the overall pre-tax operating profit to be lower than 2011 compared
with the prior guidance of tallying. Operating margin in the
Automotive segment is anticipated to be equal or lower rather then
the prior guidance of improve over 5.4% in 2011.