Ford Motor Co. (F) has decided to recall 13,493 Edge SUVs in China to repair faulty fuel systems, according to Reuters. Inferior quality of the fuel pulsation damper used in the vehicles might crack and lead to fuel leakage. This may eventually lead to fire.
Manufactured between Sep 2, 2010 and Apr 25, 2013, the recalled vehicles possess a 2.0-liter engine. Ford will start recalling the vehicles from Feb 21, 2014.
Ford recently recalled 27,933 Edge crossover vehicles of model years 2012 and 2013 in the U.S. to fix the same fuel line problem. This defect was discovered through warranty claims. However, there is no report of fire or injuries due to the problem. The owners of the crossover will be notified about the problem in February and the mending will be done for free.
A Chinese joint venture of Ford also recalled 81,000 Kuga crossovers last month. The recall was made to fix a defective steering part.
Not only Ford, other automakers are also recalling vehicles for several reasons. Recently, Volkswagen AG (VLKAY) recalled 2.64 million vehicles across the globe to rectify drive system and electronic problems.
Ford posted earnings per share of 31 cents in the fourth quarter of 2013, which is in line with the fourth quarter of 2012 (all excluding special items). With this, the company has surpassed the Zacks Consensus Estimate of 28 cents.
Revenues in the quarter grew 3.6% to $37.6 billion, exceeding the Zacks Consensus Estimate of $35.47 billion. The improvement was attributable to increased wholesale volumes in the automotive business.
Safety recalls are detrimental to Ford’s brand image and are likely to hamper growth prospects. Ford currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked automobile stocks worth considering are Tesla Motors, Inc. (TSLA) and Dongfeng Motor Group Co. Ltd (DNFGY). Tesla carries a Zacks Rank #1 (Strong Buy) while Dongfeng Motor is Zacks Rank #2 (Buy) stock.
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