Ford Recalls Put Its Turnaround in Jeopardy

By Douglas A. McIntyre Published May 16, 9:15AM EDT

Quick Read

Ford Motor Co.’s (NYSE: F) quarterly statements are plagued by recall write-offs.
Management lacks the skills to solve what Ford has admitted is key to a successful future.

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In August 2022, senior management at Ford Motor Co. (NYSE: F | F Price Prediction) acknowledged that the company had a huge quality problem—the worst among the world’s largest car companies. The Wall Street Journal ran a lengthy article that month titled “At Ford, Quality is Now Problem No 1.” Recalls were the yardstick used. Jim Farley Ford’s CEO remarked, “We continue to be hampered by recalls and customer satisfaction actions. This affects our cost but more importantly, it falls short on our most fundamental commitment to our customers.”

Despite Farley’s comments and a list of comments about planned improvements, recall write-offs plagued Ford’s quarterly statements. As recently as last fall, Farley said, “Cost, especially warranty, has held back our earnings power, but as we bend that curve, there is significant financial upside for investors.” The bend has not happened.

A 273,000-unit recall just hit Ford. According to the National Highway Traffic Safety Administration, it covered some 2022-2024 model Navigator and Expedition vehicles. Faulty brakes were part of the reason. They create the “risk of a crash.”

The new news goes to the heart of whether current management has the skills to solve what Ford has admitted is key to a successful future. It has now been years without success.

Ford wants to maintain its position as a major player in the gasoline-powered car business, which generates all its profits. It also wants to move into the electric vehicle (EV) segment and compete with Tesla and Chinese EV companies that sell vehicles in China and other parts of the world. Tariffs have kept Chinese EV companies out of the United States, but President Trump has taken tariffs off and on and off on Chinese imports.

The president cannot make Ford successful, tariffs or not.

Ford continues to have a careless culture. It has not detailed its plans to solve the quality issue, and because of this, investors have abandoned it. Its stock is down 13% over the past year.

Investors do not believe Ford’s promise.

Ford’s 8% Yield Is an Idiot Test

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.