Ford Motor Co. (F) has been forced by the government to extend its recall of its best selling pickup truck, F-150, by 6,000 units to 150,000 units in the U.S. and Canada. The recall was related to a glitch with the front air bags that may deploy when not needed due to a short circuit.
In 2009, National Highway Traffic Safety Administration (NHTSA) opened an investigation into 1.3 million units of F-150 trucks from the 2004-2006 model years. The vehicles were manufactured at the company’s Norfolk Assembly Plant in Virginia. However, Ford is recalling only those vehicles that were manufactured between November 1, 2004 and June 30, 2005, i.e., from the 2005-2006 model years.
In November last year, NHTSA revealed that it had received reports of 98 injuries due to unintentional air-bag deployments. Most of the accidents occurred when the trucks were started.
The Transportation Department has been reviewing Ford’s response to its request for the recall of F-150 trucks. If it determines that the recall is inadequate, it may seek a public hearing to decide whether Ford should widen its recall further or not. The last such hearing was scheduled in September 2009.
Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM) announcement of the largest-ever global recall of 11 million vehicles since September 2009. The Japanese automaker’s recall was related to problems such as faulty accelerator gas pedals and slipping floor mats as well as defective braking systems.
The string of recalls has led Toyota to face numerous personal injury and wrongful death lawsuits in federal courts. The Transportation Department of U.S. has imposed $32.4 million in fines on Toyota related to two separate investigations due to late recall of millions of defective vehicles on top of the highest-ever fine of $16.4 million paid earlier in 2010 related to the same issue.
At the beginning of February this year, Ford also recalled about 363,000 units of F-150 pickup trucks due to a defect with their interior door handles. In 2011 till date, the automaker has recalled more than 1 million vehicles. There have been more than nearly 600,000 vehicles recalled throughout 2010.
Ford, a Zacks #3 Rank (Hold) stock, posted a 24% fall in profit to $1.2 billion or 30 cents per share (before special items) in the fourth quarter of 2010 from $1.58 billion or 43 cents per share (before special items) in the same quarter of 2009. With this, the automaker has missed the Zacks Consensus Estimate by 19 cents per share.
The decline in profit was attributable to lower year-over-year revenues generated by the company’s automotive operations as well as the financial arm. Total revenue during the quarter ebbed 7% to $32.5 billion. However, excluding revenues from Volvo, sales improved by $1.6 billion or 5% from the fourth quarter of 2009.
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