Ford Recalls Escapes Again - Analyst Blog

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Ford Motor Co. ( F ) plans to recall 7,150 vehicles manufactured in November last year due to a problem with the child lock on the left rear door. About 5,650 vehicles will be recalled in the U.S. The recall involves redesigned 2013 Escape crossover, which has been recalled multiple times last year.

Ford will inspect 5,638 units of Escape for finding the defect. Those vehicles were built in Louisville Assembly Plant between Nov. 14 and Nov. 24 last year.

Further, the company will inspect 1,223 units of Focus cars and 283 units of C-Max vehicles under the same recall. Both the models were manufactured at Michigan Assembly Plant between Nov. 17 and Nov. 21.

Ford revealed that the child lock on the left rear door in the vehicles may not function properly when the driver tries to activate it. However, the driver may incorrectly believe that the locks are working properly. The automaker is not aware of any accidents or injuries related to the problem.

On November 30, Ford had 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 had received reports of 12 fires in Escapes and one in a Fusion.

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 last year. The automaker had recalled 485,000 units of old Escapes in the month due to sticking gas pedals that can cause crashes.

Automotive safety recalls were brought into focus by media after Toyota Motors ' ( TM ) 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. Last year, the Transportation Department of U.S. slapped a fine of $17.35 million on Toyota due to late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles.

According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The latest fine adds to $48.4 million imposed by the U.S. government on the company in 2010 due to late recall of millions of defective vehicles.

Ford, a Zacks Rank #4 (Sell) stock, posted a robust 55.0% rise in earnings per share to 31 cents in the fourth quarter of 2012 from 20 cents in the same quarter of 2011 (all excluding special items). With this, the company has beaten the Zacks Consensus Estimate of 26 cents

Ford's fourth-quarter pre-tax profit of $1.7 billion was the highest in a decade. Meanwhile, net profit surged 55.7% to $1.2 billion from $797 million a year ago. Thanks to the impressive North American results and, to some extent, solid improvements in Asia Pacific Africa operations.

Few stocks that are performing well in the industry where Ford operates include STRATTEC Security Corporation ( STRT ) and Gentherm Incorporated ( THRM ) Both are Zacks Rank #1 (Strong Buy) stocks.



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: F , STRT , THRM , TM

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