Ford Extending MyTouch Warranty

Following a string of complaints from its customers regarding the touch-screen entertainment and navigation system, Ford Motor Co. (F - Analyst Report) is reportedly set to upgrade and extend the warranty on its MyFord Touch system by two years.

After the upgrade, MyFord Touch will feature a more simple Bluetooth pairing process and can better recognize natural speech and features. The warranty period for the system has been extended to 5 years with no limitations on miles traveled, compared with the earlier warranty period of 3 years and 36,000 miles. The company has also extended the warranty of the software in the Lincoln vehicles by 2 years with unlimited miles traveled from 4 years and 50,000 miles.

Ford will be providing the upgraded navigation system to drivers without navigation by the next month. Vehicles with navigation systems will receive updates in January. Hybrids, plug-in hybrids and electric vehicles will be upgraded by the first quarter of 2013. The drivers can either receive the upgrades from the local dealers or from the company directly, where they have to download the software from the USB drives provided by Ford.

Ford considers that technological improvement of the vehicles is essential on a regular basis with emphasis on software and application. Recently, the company upgraded the voice recognition capability and navigation in the 3.5 version software. Ford had earlier upgraded MyFord Touch in March, owing to the slow speed and complexity associated with the system.

Michigan-based Ford is one of the largest automobile producers globally. The company is divided into two segments: Automotive and Financial services.

We appreciate the company’s expansion plan in both the mature and emerging markets, continuous focus on hybrid vehicles and plans for launching 6 new Lincoln models in the next 3 years. However, we are concerned about its sluggish European and South American operations together with disappointing results from its Financial Services.

Ford, which competes with Toyota MotorCorporation (TM - Analyst Report), maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. We have a long-term (more than 6 months) Neutral recommendation on its shares.