Ford's Recall Headache: Could This Stall Its Profitability Drive?

Ford Motor Company F is facing scrutiny over an issue with the instrument panel display, resulting in more than 355,000 trucks being recalled. The recall is expected to affect certain Ford 2025-2026 models, F-550 SD, F-450 SD, F-350 SD, F-250 SD and the 2025 F-150. These models are at risk of not showing critical information, such as warning lights or vehicle speed increases, as the digital display of the dashboard is managed by the instrument panel cluster.

This adds to Ford’s growing list of safety recalls, with more than 90 so far this year — the highest among U.S. automakers. The financial toll is already significant: Ford booked a $570 million charge in its second-quarter earnings tied to recall-related costs.

The latest issue follows Ford’s previous major recall of 850,000 pickup trucks and SUVs due to a potential fuel pump failure. With such frequent safety recalls coming its way, Ford has to bear humongous costs of repairing faulty features. Such recalls will also result in losing customers’ trust and establishing Ford as unreliable. It is already ailing from the rise of electrification and cut-throat competition posed by Chinese automakers.

To address the challenges of profitability and quality, Ford is doubling down on internal testing and product validation. Continuous tests are being conducted to find the most resilient ones, differentiating the defects in the developmental phase itself. Ford expects these efforts to turn instrumental only after 18 months, resulting in reduced warranty claims and improved product reliability. To combat this particular recall, Ford has advised that the software will be updated by dealers or through an over-the-air update, free of charge.

Other automakers are also grappling with quality setbacks.

General Motors GM, the American automaker giant, recalled 23,656 Chevrolet Corvettes (2023-2026 models) due to a fuel leak risk, according to the NHTSA. Affected models of General Motors were facing an issue with excess fuel spill into the fuel-filler pocket during refueling, potentially causing a fire if it contacts hot engine or exhaust parts. Affected models include Corvette, Corvette Convertible and Corvette Coupe.

Stellantis STLA, the pioneer in EV technology, voluntarily recalled around 72,000 vehicles in the United Kingdom from brands including Peugeot, Citroen, Vauxhall, Jeep, Fiat, Alfa Romeo and DS Automobiles (2023-2025 models) due to loose high-pressure fuel pipe nuts that could cause leaks and fires. The company suggested rework involves retightening connections. Stellantis also stated that it will take under 30 minutes and is free.

The scale, frequency and financial bite make Ford’s situation especially concerning for investors. With recalls already wiping out over half a billion dollars in quarterly profit, only time will tell whether Ford can finally get quality under control — or risk stalling its profitability drive.

The Zacks Rundown for Ford

Shares of Ford have gained around 242.2% year to date against the industry’s decline of 9.5%. Its peers, General Motors and Stellantis, have gained 21% and lost 43%, respectively, over the same period.

From a valuation standpoint, F trades at a forward price-to-sales ratio of 0.29, below the industry average. It carries a Value Score of A.

Take a look at how Ford’s EPS estimates have been revised over the past 30 days.

Ford stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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