Ford hit with recall of over a million cars. Why Investors Shouldn’t Worry

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Ford engine

just had a big one recall listed on the National Highway Transportation Safety Administration website. There’s a good reason why it shouldn’t hurt the automaker’s stock.

Investors have been very focused on recalls. They really don’t have to be.

NHTSA announced that Ford (Ticker: F) is recalling 1,280,726 Ford Fusion and Lincoln MKZ vehicles to repair a front brake hose that could rupture.

The recall is dated March 10th. The date the recall appears on the NHTSA website is usually a few days after the date of the recall notice.

Dealers will replace the hose free of charge.

More than a million cars for a single recall is a lot. Prior to this recall, the top 12 automakers in the US recalled approximately 26 million vehicles over 407 separate recalls last year. The average recall affects around 64,000 cars.

Still, Ford stock isn’t doing much relative to the market in Friday’s trading. Shares are down 0.9%.

S&P500
And

Dow Jones industry average
Futures are down 0.7% and 0.8% respectively.

Ford stock shouldn’t do much in this recall. Cars built between 2013 and 2018 are affected. Ford no longer makes Fusions or MKZs. Of course, durability and quality are important to all automakers, but car buyers take these into account when purchasing vehicles. For investors, all sales and profit margin information available on the marketplace.

Investors have been focusing more on vehicle recalls lately, and what should actually qualify as a recall is largely due to that lately

Tesla

(TSLA).

Tesla

has recalled approximately 3.8 million vehicles in the United States over the past 12 months via 20 separate recalls.

Tesla’s largest recall also affected more than a million vehicles. A closing window might have exerted too much force. The issue was resolved with an over-the-air software update. More than 99% of Tesla recalls over the past year have been resolved through software.

Some recalls are significant for investors. These are usually ones that incur unusual costs or have very serious security implications.

NHTSA requires a recall for any issue that poses a safety hazard. It’s good politics. However, many car owners don’t find out about recalls until they bring their car in for regular maintenance.

Write to Al Root at allen.root@dowjones.com