Ford Motor Co.
) plans to recall 8,266 units of its recently launched Escape
compact sport-utility vehicles (SUVs) in order to fix their
improperly installed carpet padding. The 2013 model year vehicles
were manufactured between March 8 and June 7 this year at the
company's retooled Louisville Assembly plant.
According to National Highway Traffic Safety Administration
(NHTSA), the carpet pads in the vehicles are misplaced and can get
in the way of a driver's foot while breaking causing braking
failures, thereby increasing stopping distances and the risk of
crashes. Ford dealers have decided to remove the carpet padding and
replace a console trim panel at free of cost when the vehicles will
be recalled on July 23.
The redesigned Escape SUVs are the company's second-best selling
vehicle after F-Series trucks. Last month, it was the sixth
best-selling vehicle in the U.S. Sales during the month soared 28%
on a year-over-year basis to 28,500 units.
In May, Ford recalled 27,000 units of Windstar minivans from
Virginia, which is a part of its larger recall of more than 600,000
minivans in the U.S. and Canada in 23 states on August 2010. The
defect was caused by salt that can cause the axles to rust, crack
and even break, leading to loss of vehicle control.
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 #4 Rank (Sell) stock, posted a sharp 20% fall in
profits to $1.6 billion in the first quarter of the year from $2.0
billion in the same quarter of 2011. On a per share basis, profits
ebbed 17% to 39 cents from 47 cents in the first quarter of 2011.
Nevertheless, it was higher than the Zacks Consensus Estimate of 35
The automaker has attributed the decrease in profits to higher
tax expense, lower operating results and higher charges emanating
from buyouts of hourly workers in the U.S. as part of its UAW
agreement in 2011.
The company's profits drastically fell in all its operating
regions, except North America. In fact, it recorded a loss in
Europe and Asia-Pacific-Africa compared with a profit in the
comparable quarter of 2011.
Total revenue in the quarter slipped 2% to $32.4 billion, barely
surpassing the Zacks Consensus Estimate of $32.0 billion. The fall
in revenues was attributable to lower wholesale volumes in Europe
and Asia, partially offset by higher volumes in North America and
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