Al Root
Ford Motor followed up an epic year for recalls in 2025 with the largest auto recall of the new year.
Recalls are only a watch item for investors. But they are a reminder for Ford shareholders that a focus on quality is key for the stock in the new year.
Ford is recalling almost 117,000 cars to fix a potential problem with engine block heaters on older Focus, Escape, and MKC models.
It's the largest recall so far in 2026, according to the National Highway Traffic Safety Administration. Ford recalled a record 12.9 million cars in 2025.
The numbers are large, but Barron's has long noted that millions of vehicles are recalled by dozens of auto makers each year in the U.S. It's part of doing business and rarely rises to the level of a stock-moving event.
Ford's latest recall is another example of that. Investors don't have to worry -- much -- but quality manufacturing at Ford has been an issue for profit margins.
Warranty expenses totaled almost 4% of sales at Ford in 2024. The number for General Motors was closer to 3%. That one percentage point could be worth 40 cents in extra earnings per share. At historic valuation multiples, that turns into $2 or $3 of stock price -- that is significant with Ford's current value of about $13 a share.
That math is only an illustration. What's more, investors and markets know about the potential for improvement and price it into shares, adjusting the odds each day.
Still, higher quality can mean a higher stock price for Ford.
Ford stock was up 0.3% in premarket trading at $13.32, while S&P 500 and Dow Jones Industrial Average futures were little changed.
Coming into Wednesday trading, Ford stock was up 27% over the past 12 months, illustrating again that large recalls don't typically move car stocks significantly. Investors tend to focus on other things.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 21, 2026 10:14 ET (15:14 GMT)
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