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Will More Recalls of the Escape Hurt Ford's Stock?

By John Rosevear - Dec 10, 2013 at 4:59PM

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Ford has now issued seven different recalls on the new Escape. Is it time for Ford shareholders to worry?

The Ford Escape was an all-new model last year. Sales are up 14% this year through October. Photo credit: Ford Motor Co.

Ford (F 3.89%) recently announced two new recalls  for its 2013 Escape. The new recalls cover almost 140,000 Escapes sold in the U.S., and the defects in question are pretty serious: 13 vehicle fires have been reported, though nobody has been injured.

Every automaker has recalls, and as long as nobody has been injured as a result of the problems, they're usually no big deal. Cars and trucks are complicated machines that are expected to be safe and reliable for years, through demanding conditions. Problems happen. As long as an automaker acts promptly to take care of the problem, it's not usually a cause for the automaker's investors to worry. 

But these new recalls bring the total number of recalls on Ford's new Escape to seven. That's a big number, even if nobody has been injured.

Ford's reputation for quality improved a great deal over the last few years. It has taken some hits in recent times because of frustrations with the MyFord Touch touch-screen system, but those haven't seemed to slow Ford's sales. But as Fool contributor John Rosevear explains in this short video, as the recalls pile up, Ford's recently improved reputation -- and its sales -- could start to come under pressure.

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