This is beginning to get out of hand. After discovering just two days ago that legacy automaker Ford (F) broke a record for the most recalls of any car company in history, Ford announced another recall. And it is a rather substantial recall, too, with well over half a million cars impacted. Ford shareholders could not shrug off this news, and shares slumped nearly 2.5% in Wednesday afternoon’s trading.
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The newest recall is over a matter of fuel injectors, which are “…potentially cracked…,” according to a Wall Street Journal report. Cracked fuel injectors may leak fuel, which, of course, pretty much turns a car into a fire hazard on wheels. Fuel is only supposed to be in very specific portions of an engine at any given time, after all. Impacted models include Bronco Sport models from 2012 to 2024, and Escape models from 2020 to 2022 that have 1.5-liter engines. Ford plans an update to engine-control software for now, and a more permanent fix to follow.
But this is where things get worse for Ford. Much worse. The total number of vehicles involved in the recall, reports note, is around 694,000. And the cost of this recall will run Ford somewhere around $570 million. Thankfully, the costs involved will have little to no impact on either adjusted earnings or free cash flow, Ford noted.
No Boring Cars, Except Maybe In Europe
We know that Ford has had a philosophy for some time now: no boring cars. While “boring” is a bit of a subjective term—one man’s Shakespeare is another man’s snoozefest, after all—most took that to mean Ford was staying out of the simple passenger sedan market. But there are signs that Ford may be bringing the simple car back to the European market.
Ford—via the head of Ford Germany, Christoph Herr—noted that Ford is looking to bring in new “passenger cars” to the European market. Herr noted that Jim Farley himself said as much, which suggests it is indeed on the way. With the Fiesta gone for now, and the Focus dropped with November’s arrival, that does leave room to wonder what is left. However, the Kuga and the Puma are still in place, so Ford may be able to build on that to get some new smaller cars in the European market. In fact, some believe that these new cars may be all-electric. Some reports even suggest the Fiesta may be making a comeback sooner than expected.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, 12 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 20.1% loss in its share price over the past year, the average F price target of $9.96 per share implies 11.74% downside risk.
