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NHTSA to Investigate Ford Vehicles for Steering Issue - Analyst Blog

Posted: 7/14/2014 3:50:00 PM
Referenced Stocks: CO;F;GM;MTOR;CAAS

The U.S. auto safety supervisory body, The National Highway Traffic Safety Administration (NHTSA), has announced an investigation into steering problems in 500,000 Ford Motor Co. ( F ) vehicles. The inspection is based on NHTSA's concern that the heat shield in Ford's vehicles may get rusted, eventually leading to steering shaft blockage.

The vehicles to be inspected include Crown Victoria, Grand Marquis and Marauder of model years 2004 to 2007. NHTSA also confirmed reports of 5 complaints and one injury caused by the steering glitch. The injury occurred as the steering wheel froze when the driver entered a highway entrance ramp. The vehicle rolled over and caused injuries.

Last month, NHTSA reviewed consumer reports that indicated the leakage of exhaust fumes into the passenger cabin in Ford Explorer of model years 2011 to 2014. These fumes contain carbon monoxide (CO), prolonged exposure to which may harm the occupants of the vehicle. The emission is also accompanied with a strange odor, per the reports.

Ford is also reviewing the matter, for which it has received numerous customer complaints. If the NHTSA finds this to be a safety issue, Ford will be forced to recall these vehicles. The automaker might also be subjected to a fine.

Automobile safety issues have been garnering significant media coverage this year, mainly due to the late recall of General Motors Co. ( GM ) vehicles with faulty ignition switches. Earlier this year, the automaker agreed to pay a fine of $35 million to the U.S. safety regulators for the late recall.

Ford currently carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks worth considering include China Automotive Systems Inc. ( CAAS ) and Meritor, Inc. ( MTOR ), both of which sport a Zacks Rank #1 (Strong Buy).

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