Ford recall: North American models hit, stock price intact


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Ford motor company is recalling approximately 400,000 of its large sedans ranging from model year 2005 to 2011. The brands and models affected include Ford Crown Victoria which is ubiquitously used as either a taxi cab or a police car across America, the Mercury Grand Marquis, and the plush, upscale and roomy Lincoln Town Car.

The problem appears to be related to corrosion of the lower intermediate steering shaft of vehicles in "high corrosion states and provinces" that may result in the loss of steering, according to Ford's press release.

Well, the next question is, who are these "high corrosion" states and provinces?

The states so far include - Connecticut, Delaware, the District of Columbia, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, Wisconsin and West Virginia. Canada will face recall of about 15,000 sedans.

In other words, the Western half of the US is unaffected while most of the recall problem is concentrated on the East Coast and the Great Lakes region.

Large sedans are going out of fashion as customers are flocking towards Ford's fuel-sipping small and mid-size sedans due to rising prices, high unemployment and stagnant economy. Ford Focus and Ford Fusion have done relatively well in the small and medium car segment respectively, thanks to Henry Ford's great-grandson Bill Ford's and Ford CEO Alan Mulally's leadership. Ford family scions

With the retirement of the Mercury brand and the scaling down of Lincoln, Ford Motor has poured its resources and devotion exclusively on the Ford brand as it battles powerful, well-oiled manufacturing machines of its Japanese, Korean and increasingly Chinese rivals.

So should we expect Ford's stock price to steer downward this week following the recall news?

Not likely. Stock owners should take heart since the recall numbers are miniscule relative to the overall annual sales volume of Ford vehicles. Mercury is defunct. Besides, the recall does not affect Ford's bread and butter truck and SUV models including the best selling F-150, Ford Escape and Ford Explorer.

That said, if the recall engulfs some of the more popular models in the next few days, things could change dramatically. So stay tuned.

[images via plus Google, Ford Motor official twitter account]