Ford Motor Co. (NYSE: F) has just recalled 161,000 2013 model year Escapes due to engine fire risks and 12,000 of the same model because of possible fuel leaks. Add these to Ford’s already collapsing reputation, based on ratings from major research firms, and the car company’s standing with the public and future sales are in trouble.
Ford recently placed poorly in three quality surveys. In the J.D. Power Initial Quality Study, the brand rated well below average. In the 2013 U.S. Vehicle Dependability Study, it rated below average. And in the new Consumer Reports reliability study, Ford ranked 26th on a list of 28 brands. As has been the case for many years, it usually ranks well behind the leader — Toyota Motor Corp. (NYSE: TM) — which sells about as many vehicles in the United States as Ford does.
Sales of the Escape are particularly important to Ford. Over the course of the first 10 months of this year, it was the largest selling Ford vehicle after the F-Series pickup. Ford sold 250,543 Escapes over this 10-month period.
Ford compares the Escape to the Honda Motor Co. Ltd. (NYSE: HMC) CR-V, which has outsold it so far this year. The Toyota RAV4, another Escape competitor, sold more than 177,000 units during the same period. And the competing Chevrolet Equinox sold more than 202,000 units. In other words, the Escape is in a part of the auto market that is remarkably competitive.
Ford cannot expect to keep the sales momentum it had as it emerged from the car industry downturn, which was particularly strong during the recession, if its reputation continues to erode rapidly. And the mounting evidence of this erosion is surprisingly powerful. Ford’s quality control process has broken down, and it will pay for that in the next several model years, even if it can reverse the problem swiftly. American consumers have long memories.
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