Summary:
Ford (F) recently announced another recall; this time recalling over 83,000 vehicles. That combined with its on again/off again relationship with EV, has some beginning to question how long the company can continue fumbling the ball before its stock takes a hit and they begin to look elsewhere for new leadership.
Two of our 24/7 Wall St. Analysts Doug McIntyre: and Lee Jackson, recently discussed the continued issues, as well as how long investors should keep their patience with the company. Although Ford and General Motors are still profitable, McIntyre does not exactly have a lot of confidence in their leadership.
“They still have the problem that the Ford family runs it,” McIntyre laughs. “They had over a hundred recalls last year and management’s contention is those recalls are all old. Those are cars from years ago when we didn’t care about quality. That’s not the case.”
As far as the recent issue centering around headlight control, the long-time automaker said a fix is currently under development and that owners will be notified by mail once a remedy is available.
Transcript:
Doug McIntyre: We’re gonna go back to my favorite company. Oh, maybe to short, by far my favorite company. That’s the Ford Motor Company (NYSE: F), which has a whole bunch of problems. They’ve put the EV problems behind them. It cost them a lot of money. They still have the problem that the Ford family runs it. And believe me, that’s not a stable of geniuses. Alright. I’m sorry, but it’s not. But the last problem is they cannot get out of the recall business. They had over a hundred recalls last year and management’s contention is those recalls are all old. Those are cars from years ago when we didn’t care about quality. That’s not the case. Job one, it’s a lie. Well, guess what? They’ve had a bunch of recalls so far this year. Their total is over 2 million and some of those things are last year’s model. So they can’t simply walk around and say the quality of the Ford Motor Company has gone through the roof in the last year or two.
Lee Jackson: Well, and at one point they were trying to make the case that they’re more hands-on now from a recall standpoint, rather than to see it fester into something where people are dying as a result of the issue. But recently it was 1.7 million cars with backup mirror or backup camera issues. And if that fails, I don’t think a lot of the newer drivers are familiar with how to back up without a backup camera. I could be wrong on that, but yeah they don’t know how to do that perhaps. I have to admit I rely on it myself. But you know we read this article, I shared this article with you. It was like every model, every vehicle for like the last whatever it was, X amount of years, they all had a recall. They all did. And there was like one model that didn’t have a recall. I was stunned by that. I mean every single thing you make has a recall from some problem or another. That’s truly astonishing.
Doug McIntyre: Yeah. I love this. Farley, the CEO, has been posting all over social media. He’s in Ford Australia making sure that the people at Ford Australia are happy to be part of the Ford family. I was on social media. He posted this on Instagram and I said we’re begging you to come back to Detroit to fix the recall problem.
Lee Jackson: Did he answer?
Doug McIntyre: I don’t know. He didn’t answer me, but I think he knows I don’t like him.
Lee Jackson: I think he knows who you are, to be frank with you. Well, the thing is that again I get the sensitivity to problems with an automobile because you remember it goes way back. But there were certain problems with certain cars and people were killed. I guess they just don’t want that liability. And they’d rather have recalls. And the dealers don’t care. That’s technically warranty work so they get paid. Ford has to pay them to do it.
Doug McIntyre: Yep.
Lee Jackson: So they don’t care other than maybe an upset customer every now and then. But this has been an ongoing thorn in their side and I’m sure they’d rather have this go away.
Doug McIntyre: The dealer loves it because the salesman goes up to the person and says why do you want that car that’s been recalled. Look at this brand new one.
Lee Jackson: Yeah.
Doug McIntyre: Look at this brand new one we got.
Lee Jackson: That likely won’t get recalled.
Doug McIntyre: No, it will be. It just won’t be recalled for a while.
Lee Jackson: Yeah. So you’ll get a little time out from the recall action. Alright. Well the stock’s still doing it. It got a little tailwind late last year and early into this year, but it looks like it’s kind of stalled again. So again it’s a decent company. They’re making good money. And General Motors (NYSE: GM) is making good money.
Doug McIntyre: Oh great. Listen, I’ve said this before. If they’d stayed in the gasoline-powered car business, if you take what they lost in EVs and what they made in gas-powered cars, their profits would have been insane over the period of the last five years.
Lee Jackson: Absolutely. But the charge-offs for the EV were just staggering. It was staggering. But anyway, so there you go. Keep an eye on Ford because if this continues they’re going to continue to have the image of it and the optics of it are really bad.
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