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Do Recalls Threaten to Hurt Ford’s Stock?

October 18, 2017
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It is no secret that Ford has fallen behind other leading automotive brands. The company’s stock has essentially stagnated this year as its main competitor, General Motors, surges forward. While the company is trying to make an effort to turn things around, lately it has been marred with setbacks.

Just today, CNBC reported that:

Ford is unlikely to surprise to the upside in the next year because new CEO Jim Hackett’s proposals may not have a measureable impact until 2020, according to one Wall Street firm.

The firm (RBC) believes that there are still too many variables that could affect the companies performance. As a result, they issued slightly more reserved guidance on the stock.

However that is not the only problem Ford is facing. Reuters came out with a report that over 1.3 million Ford truck are to be recalled in North America due to a door latch malfunction. According to Reuters figures, this puts Ford’s estimated recall costs for the year over a billion dollars.

Setbacks such as these will not do Ford any favours. The company is struggling with market demands such as electric and hybrid car models, a field in which they are desperately lagging behind General Motors and the Japan manufacturers.

The Detroit based automaker has also announced some serious cuts to be made in the coming year that had investors excited. However, now it seems like some of those savings will be going into the recalls.

Read: Ford Announces Major Cuts, But Will They Work?

Investors will have to wait and see how these recalls and strategic changes will affect Ford’s stock going into the final quarter of the year. A lot is riding on them showing signs of an upcoming turnaround, because if they don’t, investors shouldn’t expect there stock to be going up any time soon.

To read Reuters’ article on the Ford recalls, click here.

To read CNBC’s article about RBC’s new guidance on Ford, click here.

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