Ford Motor (F, Financial) announced on Wednesday that it’s issuing recalls spanning more than 220,000 vehicles in North America. The safety recall is being done to fix three potential issues – faulty door handles, vacuum pump relay issue, and sensors. The Detroit automaker said that it’s not heard of any accidents or injuries pertaining to this. Recalls had a bearing on Ford’s earnings last year. Will 2015 be another year of big recalls for the automaker? Let’s take a look.
Getting into the details
Most of the recall is for the potential problem with the door handles. The automaker said that it is recalling around 213,000 Ford Explorer SUVs and Ford Police Interceptor utility vehicle in North America from model years 2011 to 2013. The string that regulates the interior door handles may malfunction, become loose and prevent the door from locking. This could make the door open easily in case the vehicle crashes and impacts the side of the car.
Majority of the recalled cars, around 194,484, are in the U.S., followed by 12,392 in Canada, and 6,035 in Mexico. Upon recall, dealers would have to examine all four door handles, repair or replace them, if needed, without charging any cost from the buyer.
Ford’s Lincoln brand of cars will also see recalls. As many as 1,725 units of Lincoln MKT limo and hearse from model years 2013 to 2015 is being recalled for problems relating to vacuum pump that could result in fire. Of the total Lincoln recalls, 1,586 affected vehicles are from the U.S. and 139 are in Canada. The vacuum pump relay and related wiring will be replaced by the dealers without any cost.
Besides, Ford is also recalling 6,500 F-Series Super Duty ambulances from model years 2011 to 2015. The company suspects these vehicles to have faulty exhaust gas temperature sensors that may incorrectly identify temperature in the vehicle. Around 6,322 affected vehicles are in the U.S., 96 are in Canada and the remaining 54 in Mexico. Dealers are required to fix this by updating the software at no cost to the buyer. The automaker is not aware of any crashes or injuries, but it’s "taking this action because of the unique nature of ambulance and emergency vehicles."
Recalls denting consumer sentiment and squeezing profit
The question looming large at Ford is whether these regular recalls are denting consumer sentiment. After the recent recall, Ford’s total recalls concerning door handle issues in the last year sums to more than 1 million vehicles. This is at least the third time the Blue Oval has issued recalls since 2014 on account of faulty door handles.
The company recalled 204,945 Ford Taurus, Lincoln MKS and Police Interceptor pertaining to model years 2010 to 2013 for the same problem in January. A few months later, in May, Ford had 692,744 Escape SUVs recalled from model years 2013 and 2014, again for the door handle issue. Owing to such big recalls, Ford’s pretax profit was $6.9 billion in North America in 2014, down from $8.8 billion in 2013. In fact, as far as recalls are concerned, 2014 was quite a tough year for the auto industry.
Ford expects 2015 to be a much stronger year with pretax income coming in the range of $8.5 billion and $9.5 billion. While recalls are difficult to predict, the company is definitely working things out to lower the volume and take corrective action for models going forward. Will Ford see lesser number of recalls eroding profits this year? Only time will tell how effective is Ford’s effort for controlling recalls.
