Ford Recalls Windstars from Virginia

Ford Motor Co. (F - Analyst Report) will recall 27,000 units of Windstar minivans from Virginia, which is a part of the company’s larger recall of more than 600,000 minivans in the U.S. and Canada in 23 states on August 2010. The Windstars are either sold or registered in Virginia.

The vehicles belong to the model year 1998 through 2003 and were manufactured at Ford's Oakville, Ontario plant from September 1, 1997 through July 3, 2003. The defect was caused by salt that can cause the axles to rust, crack and even break, leading to loss of vehicle control.

Ford has decided to recall the additional Windstars after receiving 11 reports of axle cracks from Virginia between October 2011 and March 2012. However, the Detroit automaker has not yet received any reports of crashes or injuries in Virginia due to the problem.

Ford will either replace the axles or install brackets to fix them. The company will start sending letters to the vehicle owners in Virginia starting the week of June 18.

According to Ford representative Daniel Pierce, about 60% of the vans in the 2010 recall have been brought in for repairs. Meanwhile, some vans have been scrapped and others were not repaired. He also added that the company received reports of 8 crashes and 3 injuries related to the original recall.

Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM - Analyst Report) 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 vehicles.

Ford, a Zacks #3 Rank (Hold) 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 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 cents.

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 South America.