Ford (NYSE: F) has made a name for itself as the recall leader of the car industry. Its warranty financial troubles also trigger huge hits to its earnings. A new recall includes over 850,000 vehicles which have a risk of a fuel pump failure.
Key Points
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Ford Has Had Huge Recall Numbers This Year
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Recalls Have Hurt Earnings
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According to the by the National Highway Traffic Safety Administration, “Ford Motor Company (Ford) is recalling certain 2021-2023 Bronco, Explorer, Lincoln Aviator, F-250 SD, F-350 SD, F-450 SD, F-550 SD, 2021-2022 Lincoln Navigator, Mustang, F-150, and 2022 Expedition vehicles. The low-pressure fuel pump may fail, which can result in an engine stall while driving.” Ford has not come up with a way to fix the problem. The “while driving” part should give owners concern. The vehicles involved will be fixed for free,
Carscoops writes that Ford recalled four million vehicles before the end of June. The recall total was 81. The average vehicles per recall hit 50,341. This is a recall every 2.12 days.
The cost of warranty work cut Ford’s adjusted EBIT in 2024. In the fourth quarter, recall effects on earning were about $500 million. That was down slightly from the third quarter. Ford also warned about the negative effects of warranty costs on October 28 of last year. CEO Jim Farley commented “Cost, especially warranty, has held back our earnings power, but as we bend that curve, there is significant financial upside for investors.” This is not the first time he has made comments that are similar.
Ford can ill afford this major string of self-inflected injuries. Farley recently commented Ford was well behind the curve in introducing world class EVs. He expressed anxiety about the lead Chinese EV makers have in this sector. Ford has lost tens of billions of dollars on EVs. The No.2 US car company expects it will lose another $5 billion to $5.4 billion on EVs this year.
Ford shareholders have paid for its mistakes. The stock is down 10% in the last year, while the S&P 500 is 11% higher.
So far in 2025, Ford’s recalls “beggars the imagination.”
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Author: Douglas A. McIntyre
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