Ford Driveshaft Defect Fix to Cost $142 Million
June 28 2017 - 1:10PM
Dow Jones News
By Christina Rogers
Ford Motor Co. will book a $142 million expense for recall costs
related to Transit vans, the latest in a series of quality-related
expenses dinging the auto maker's bottom line.
The No. 2 U.S. car maker by sales said the costs, booked in the
second quarter, will cover three new recalls in North America,
including a campaign to fix roughly 400,000 model year 2015-2017
Transit vans. The defect can cause the driveshaft to separate,
resulting in a loss of power or unintended vehicle movement.
Ford disclosed the additional expense Wednesday in a regulatory
filing. This is the second time this year a hefty recall charge has
hurt Ford's earnings, illustrating the disproportionate effect
quality problems can have on Ford's efforts to keep profits growing
in a slowing U.S. car market.
In March, Ford said it would take a $295 million charge for
recalls covering vehicles with fire risks and faulty door latches,
forcing the auto maker to lower its first-quarter guidance.
The latest recall effort also affects a handful of 2017 Police
Interceptors and 2016 Ford Escapes. Ford said it isn't aware of any
accidents or injuries related to vehicles covered by the
recalls.
The campaigns come even as Ford has improved its standing in the
J.D. Power's influential Initial Quality Study, a report that ranks
brands according to the frequency of problems occurring in their
vehicles. In this year's report, Ford received its highest mark
since the study started 31 years ago, slotting in as the No. 2
non-premium brand with the fewest problems.
Write to Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
June 28, 2017 12:55 ET (16:55 GMT)
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