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Ford (F) Recalls 108,000 Vehicles to Resolve Seat-Belt Issue

Zacks Equity Research

Ford Motor Company F announced the recall of more than 108,000 midsize cars in North America. The initiative is being undertaken to resolve an issue with seat belt anchor pretensioners that can restrain an occupant in case of a crash and increase the risk of injury. The recall covers 103,374 vehicles in the United States, 4,002 in Canada and 1,023 vehicles in Mexico.

The affected vehicles involve Ford Fusion and Lincoln MKZ cars from the company’s 2015 model. Ford Fusion vehicles were built at Flat Rock Assembly plant from Aug 1, 2014 to Jan 30, 2015 and at the Hermosillo Assembly facility from Aug 1, 2014 to Nov 24, 2014. Meanwhile, Lincoln MKZ vehicles were built at Hermosillo Assembly from Aug 1, 2014 to Nov 21, 2014.

The vehicles’ front seat belt cable can degrade the strength below the required level due to heat buildup, which may not adequately restrain passengers.

The dealers are expected to provide a protective coating to the cables during a pretensioner deployment as a solution to the above-mentioned issue. The owners of the company shall further be notified about the resolution starting Sept 9, 2019.

Like some of its peers, Ford too has been recalling vehicles due to safety issues. Frequent recalls for fixing faulty vehicles are concerns for Ford. Apart from higher expenses for repairing faulty vehicles, recalls also hurt consumers’ confidence in a brand. In July, Ford had withdrawn about 58,000 Focus cars in North America that had an issue with the powertrain control module software that could deform the fuel tank in the vehicles. In June, the company recalled 1.2 million Explorer SUVs due to a potential suspension link fracture issue. In May, Ford recalled roughly 273,000 of Ford Ranger pickups and Fusion vehicles in North America. In April, the company recalled nearly 874,000 trucks for engine block heater cable defects. Apart from recalls, the company also announced that government authorities initiated criminal investigation over an emission certification matter.

In the past year, Ford has outperformed the industry it belongs to. During the same time frame, the company’s shares have fallen 6.9% compared with the industry’s decline of 11.8%.

Zacks Rank & Stocks to Consider

Currently, Ford has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Fox Factory Holding Corp FOXF, CarMax, Inc KMX and Gentex Corporation GNTX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Fox Factory has an expected long-term growth rate of 16.7%. In the past year, shares of the company have increased 12.9%.

CarMax has an expected long-term growth rate of 12.6%. In the past year, shares of the company have moved up 15.7%.

Gentex has an expected long-term growth rate of 5%. In the year, shares of the company have returned 8.6%.

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