Ford Motor has announced a recall of its popular Explorer models, but this news has had little impact on the company’s stock, which continues to rise. The National Highway Transportation Safety Administration recently issued a recall notice affecting 238,364 Ford Explorers manufactured between 2020 and 2022.
Dated October 6, the recall notice may have taken a few days to appear on the NHTSA website. The reason for the recall is a potential issue with a rear-axle horizontal mounting bolt. If this bolt breaks, it could cause the drive shaft to disconnect, possibly leading to a rollaway situation. Ford has assured customers that it will replace the bolt free of charge.
Despite the recall, Ford stock is up by 0.4% in early trading on Monday, while both the S&P 500 and Dow Jones Industrial Average have also seen gains, increasing by 0.5% and 0.7% respectively.
Recalls are not uncommon in the automotive industry, and this incident seems to be just another example. In fact, major US auto manufacturers have already recalled over 16 million vehicles this year alone. The current recall was prompted by complaints involving only a small number of vehicles. It is these complaints that often lead to investigations and subsequent recalls.
For most car owners and investors, recalls are a familiar occurrence. Usually, notices are sent out by mail, and many drivers only take action when they bring their vehicles in for routine servicing. In some cases, drivers may not even be aware of any outstanding recall notices until they take their car in for maintenance.
In general, recalls are an essential part of ensuring vehicle safety. They rarely have a significant impact on stocks unless there is an issue that poses serious safety concerns or if the costs of the recall reach into the billions.
While the Explorer is responsible for about 138,132 units sold in the US this year up to September, it still falls behind the F-150, which has sold an impressive 573,370 units within the same time frame.
Fortunately, it is highly unlikely that the bolt issue will have any detrimental effect on the Explorer’s future prospects.