Back to top

Ford Recalls to Fix Child Safety Locks

Read MoreHide Full Article

Ford Motor Co. (F - Free Report) announced that it would recall 13,100 units of Ford Explorer sport utility vehicle (SUV) and Taurus and Lincoln MKS sedans in order to fix their malfunctioning child safety locks. The defect could lead the child safety locks on the rear doors to turn off automatically, letting the doors to be opened from inside.

The company would recall most of the vehicles in North America. They were manufactured between Nov 29 and Dec 12 last year at Ford’s Chicago Assembly Plant.

The automaker has not yet received any reports of accidents or injuries due to the problem. Its dealers will test and replace the safety locks free of cost if required.

In April, Ford announced another recall of the same models. The company had stated that it would recall 3,500 units of 2012 Ford Taurus and the 2012 Lincoln MKS sedans as well as the 2013 Ford Explorer SUV in order to fix their fuel tanks that can leak after a crash. It built these Taurus and MKS models between Jul 2011 and Jan 2012 and the Explorer SUV in Mar 2012.

Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM - Free 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. Last year, the Transportation Department of U.S. slapped a fine of $17.35 million on Toyota due to late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles.

According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The latest fine adds to $48.4 million imposed by the U.S. government on the company in 2010 due to late recall of millions of defective vehicles.

Recently, General Motors Company (GM - Free Report) expanded its 2012-late Aug recall of 249,260 units of midsize sport utility vehicles (SUVs) by 231,000 units after receiving more reports of vehicle fires and minor injuries related to potential fire hazard led by an electrical short in the vehicles. However, most of the complaints (58 vehicle fires and 11 minor injuries) received by General Motors are related to vehicles in the original recall.

The recall covered Chevrolet Trailblazer and GMC Envoy SUVs as well as Buick Rainier, Saab 9-7X and Isuzu Ascender SUVs, all from the 2006-2007 model years. Of the total 480,000 vehicles, about 443,000 units are recalled in the U.S.
Ford, a Zacks Rank #3 (Hold) stock, posted an increase of 4.1% in earnings to $1.6 billion and 5.1% in earnings per share to 41 cents in the first quarter of 2013, beating the Zacks Consensus Estimate by 3 cents. Revenues improved 10.5% to $35.8 billion, exceeding the Zacks Consensus Estimate of $32.8 billion.

The improvement in revenues and earnings was mainly attributable to Ford’s strong performance in North America and Asia Pacific Africa. The company’s results were disappointing in South America due to unfavorable exchange rate as well as in Europe due to the sluggish economy.

While we remain on the sidelines about Ford, stocks from the same industry that warrant a look include Nissan Motor Corp. (NSANY - Free Report) with a Zacks Rank #1 (Strong Buy).

More from Zacks Analyst Blog

You May Like