Recalls, Recalls All Around as Ford Joins the Club

Is any automaker not recalling cars, now that Ford (F) has announced a recall of its own?

Bloomberg

Sure, we all know what’s happening at General Motors (GM), which has recalled 2.6 million cars and could lead to criminal charges. Toyota Motor (TM) has recalled 119,000 Avalons from a decade ago, and Honda Motor (HMC) has recalled nearly 10,000 2014 Honda Civics. Even Tesla Motors (TSLA) had to update its software, even though it refused to call what it did a recall.

Now it’s Ford Motor’s turn. The Detroit News explains:

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The Dearborn automaker is calling back about 385,750 model-year 2001-2004 Escape compact SUVs because a subframe could fail because of rust and impact the ability to steer. About 349,000 of those Escapes were sold in the U.S.

In a second, unrelated recall announced Monday, Ford is calling back about 48,950 model-year2013-2014 Ford Fusion, Lincoln MKZ, Ford Escape and C-MAX vehicles to replace seatback frames that do not comply with a NHTSA standard. There are 42,972 vehicles that fall under the recall in the U.S and 4,744 in Canada.

Citigroup’s Itay Michaeli brings us up to date on the damage done at General Motors:

Week-1 results (full analysis in the report) suggest that last week's GM hearings negatively weighed on consumer views. However, Friday (4/4) data suggested a modest recovery. The results appear consistent with March data in that consumerperceptions suffer meaningfully on negative headlines but then also recover quickly…

This week we're awaiting a court decision on whether GM might be ordered to issue a "park it" order for recalled vehicles awaiting an ignition fix. A negative ruling would mark another escalation. A more positive headline could emerge in late-Apr/early-May if GM were to take further steps to address impacted customers (i.e. fund). The headlines stemming from GM's internal investigation are less predictable but also present a risk. Separately, if GM normalizes ATPs, some press reports may report it negatively as we've seen all year. Tactically, our prior buy-on-weakness approach for GM, Ford and [American Axle & Manufacturing (AXL)] appeared to work last week and this remains our strategy as the situation unfolds.

ConvergEx’s Nicholas Colas considers the tight spot automaker’s find themselves in:

…automakers face a real struggle in the upcoming decade.  Consumers want value-for-money, which means keeping costs low.  Every penny of manufacturing costs is real money to a car company.  Also, the government is demanding much higher levels of fuel economy but will not raise gas taxes to encourage demand for smaller cars and engines.  Lastly, as cars and trucks grow increasingly complex with more mandated safety features and creature comforts, they must still make vehicles which are safe to drive.  In short, this is not a "Same as it ever was" story.  The goalposts continue to move, but automaker resources are as tight as ever.

Shares of Ford Motor have dropped 1.6% to $15.87 at 1:41 p.m. today, while General Motors has fallen 2.1% to $34.08, Toyota Motor has dipped 0.2% to $11.02, Honda Motor has declined 2.1% to $34.50 and Tesla Motors is off 3.4% to $205. American Axle & Manufacturing has dropped 3.3% to $18.46.