What happened
Ford Motor Company (F 0.39%) shares are reacting to a legal decision from Friday that highlights the company's quality struggles. The stock dropped 6% at the market open Monday, and were still down 5.9% as of 10:33 a.m. ET.
So what
On Friday, a Georgia jury awarded $1.7 billion in compensation to the family of a couple killed in a 2014 accident involving a Ford F-250 pickup truck. Barron's reported the verdict is the largest award in the state's history. The family of the victims claimed Ford was at fault after the roof collapsed on the occupants in a rollover accident. Ford plans to appeal the verdict, according to the report.
Now what
While Ford may not be forced to pay the full amount from the verdict, the case highlighted quality issues that the company itself has recently acknowledged. In Ford's second-quarter earnings call with investors, CEO Jim Farley said, "[W]e continue to be hampered by recalls and customer satisfaction actions." In fact, Ford is on track to potentially have 6.82 million vehicles affected by recalls this year, according to a Wall Street Journal report. That's more than any other automaker, and more than 4.5 as many as rival General Motors.
Ford hired a new executive director of quality, Josh Halliburton, earlier this year. Halliburton came from research and data firm J.D. Power where he advised companies on production quality. He said he will first focus on identifying quality problems, in part by adding video cameras to catch defects during the production process.
The vehicle at the heart of the recent jury verdict was from model year 2002. Investors are therefore not likely assuming any additional financial responsibility for the company based on that one case. But the case did highlight the quality issue, and is sure to gain more headlines as the appeal process progresses.
