My Ford stock worries: Warning signal of 7 million vehicles recalled

As a Ford Motor shareholder, I really took a big gulp of bitter medicine. That mocking abbreviation for Ford - "Found on Roadside Dead" - now sounds painfully ironic.

In recent years, the recall turmoil and warranty costs have not only eroded Ford's profits but, even more alarmingly, the shocking recall data compared to the industry. Let me lay it on the line: Ford has already recalled over 7 million vehicles by 2025! What issues are hidden behind this number? Is there really a glimmer of hope?

Break the records that shouldn't exist

According to data from the National Highway Traffic Safety Administration (NHTSA), Ford is recalling over 355,000 trucks due to dashboard display issues. This recall affects the 2025-2026 F-550, F-450, F-350, F-250, and the 2025 F-150.

The numbers are simply staggering: this year, Ford recalled more vehicles in the U.S. than any other automaker, accounting for 39% of the total recalls for the year! In second place is Forest River(, a recreational vehicle manufacturer, which accounted for only 9% of the annual recall total.

Ford has issued 105 recalls this year, of which 23 are related to electrical system issues, 14 involve rearview cameras, and 13 are related to powertrain systems. Even more concerning is that the total number of recalled vehicles has exceeded 7 million, setting a new historical record for the same period.

If these numbers are not eye-catching enough, take a look at the trend of Ford's warranty expenses as a percentage of revenue.

In the early 2000s, Ford's payment ratio was relatively low, but it surged to 4% in the second quarter of last year, which is a warning sign for automakers. In contrast, General Motors' warranty expenditure ratios for 2024 and 2023 were only 2.4% and 2.3%, respectively.

CEO Jim Farley admitted nearly a year ago during an analyst conference call: "Clearly, our strategic advantages have not translated into profits as they should. Costs, particularly warranty costs, have weighed down our profitability. However, when we turn this trend around, investors will see significant financial upside."

A Ray of Hope?

Not all recalls are catastrophic. The impact of each recall varies significantly depending on whether the issue is addressed through a software update or requires time-consuming hardware repairs at a dealership.

In this latest recall, the issue can be resolved through a free software update, which has a minimal impact on the company's finances. The management's explanation for this recall is that they are strengthening quality control, which may lead to more recalls in the short term, but ultimately will provide consumers with better vehicles.

As Farley said, if Ford can gradually address quality issues, warranty expenses will decrease and profits will increase. However, despite years of efforts to improve quality, progress is still hard to see, and this is definitely a concern that investors should closely monitor in the next 12 to 18 months.

I have always been concerned about whether this once-great American automotive giant can truly break this vicious cycle. How can a company regain consumer trust in the face of such enormous quality issues? While there is hope, the road ahead is long and uncertain.

In this highly competitive automotive industry, the shadow of recalls may continue to impact Ford for a long time. As an investor, I will keep a close watch but also remain vigilant.

Disclaimer: For reference only. Past performance does not indicate future results.