Ford Motor
is recalling hundreds of thousands of its hot-selling Explorers. The stock is up. That’s the right reaction.
Recently, the National Highway Transportation Safety Administration posted a recall notice affecting 238,364 Ford (ticker: F) Explorers with model years in the 2020 to 2022 range.
The recall notice is dated Oct. 6, but such documents typically show up on the NHTSA website a few days after the date.
The issue is a rear-axle horizontal mounting bolt that might break, causing the drive shaft to disconnect. The vehicle could roll away at that point. Ford will replace the bolt free of charge.
Ford stock is up 0.4% in early trading on Monday, while the
S&P 500
and
Dow Jones Industrial Average
were up 0.5% and 0.7%, respectively.
The recall isn’t having much of an impact, and that’s probably how it should be. Recalls happen. Major U.S. auto makers have recalled more than 16 million vehicles in the U.S. so far in 2023. What’s more, the current recall was generated by complaints impacting a handful of vehicles. Complaints generate investigations which generate recalls.
Most car owners, and investors, have plenty of experience with recalls. Notices are typically mailed. Oftentimes drivers don’t do anything with them until they take a vehicle in for regular service. Sometimes drivers don’t even realize there are recall notices outstanding until they take a car for service.
Recalls are part of the process of keeping vehicles safe. They typically don’t impact stocks unless there is a safety problem that sounds serious or the recall costs rise into the billions.
The Explorer is Ford’s second-biggest seller, accounting for 138,132 units in the U.S. this year through September. That’s far behind the big dog, the F-150, of which Ford sold 573,370 in the U.S. in that time frame.
Still, there is little chance the bolt will hurt Explorer’s prospects.
Write to Al Root at [email protected]
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