As a Ford Motor Company (NYSE:F) shareholder it’s frustrating to see the recent onslaught of vehicle recalls. Problems have included anything from child safety locks, rusting, and even fire risks. Unfortunately the fire risk was associated with an EcoBoost engine used in two popular vehicles, the Escape and the Fusion. It isn’t just Ford Motor Company (NYSE:F), though; other manufacturers are having an even worse time recently with recalls. In fact, if you were to guess which two automakers had the most recalls in 2012, which would it be? If you guessed Toyota Motor Corporation (NYSE:TM) and Honda Motor Co Ltd (ADR) (NYSE:HMC) – two carmakers previously known for high quality – you would be correct. Let’s look at these companies and see if their recalls will affect sales or investors.
Just the facts
Toyota Motor Corporation (NYSE:TM) recalled 5.3 million vehicles in 2012 taking the dubious honors at the top spot for most recalls. Japanese rival Honda Motor Co Ltd (ADR) (NYSE:HMC) tried to keep it close by tallying 3.3 million vehicle recalls. GM took home the bronze with 1.4 million recalls, while Ford chalked up 1.3 million. Other than last year, when is the last time you could combine GM and Ford’s recalls and equal less than Honda or Toyota Motor Corporation (NYSE:TM)?
Escape and Fusion
These two models were recently redesigned and have been selling like hotcakes. February was another solid month, and Ford Motor Company (NYSE:F)’s first quarter is shaping up to be a great one for its revenue. The Fusion had a record February with a 28% gain over last year. The Escape had two record months in a row, with February topping last year’s mark by 29%. Let’s look at the recent onslaught of recalls. If these persist, or gain the attention of the consumer too often, it could dampen such great sales increases.
Last year Ford Motor Company (NYSE:F) had to recall 7,600 new Escapes because of a coolant leak that was causing engines to overheat and possibly catch fire. The problem was due to an engine plug being installed incorrectly on some engines, then falling out and causing the leak. Ford also had to recall 11,500 Escapes to fix fuel lines that had the potential to crack and leak. Here’s the one that really made me shake my head: 10,000 vehicles were recalled to fix carpet padding that could interfere with the user’s braking ability.