Ford Driveshaft Defect Fix to Cost $142 Million

By Christina RogersFeaturesDow Jones Newswires

Ford Motor Co. will book a $142 million expense for recall costs related to Transit vans, the latest in a series of quality-related expenses dinging the auto maker's bottom line.

The No. 2 U.S. car maker by sales said the costs, booked in the second quarter, will cover three new recalls in North America, including a campaign to fix roughly 400,000 model year 2015-2017 Transit vans. The defect can cause the driveshaft to separate, resulting in a loss of power or unintended vehicle movement.

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Ford disclosed the additional expense Wednesday in a regulatory filing. This is the second time this year a hefty recall charge has hurt Ford's earnings, illustrating the disproportionate effect quality problems can have on Ford's efforts to keep profits growing in a slowing U.S. car market.

In March, Ford said it would take a $295 million charge for recalls covering vehicles with fire risks and faulty door latches, forcing the auto maker to lower its first-quarter guidance.

The latest recall effort also affects a handful of 2017 Police Interceptors and 2016 Ford Escapes. Ford said it isn't aware of any accidents or injuries related to vehicles covered by the recalls.

The campaigns come even as Ford has improved its standing in the J.D. Power's influential Initial Quality Study, a report that ranks brands according to the frequency of problems occurring in their vehicles. In this year's report, Ford received its highest mark since the study started 31 years ago, slotting in as the No. 2 non-premium brand with the fewest problems.

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(END) Dow Jones Newswires

June 28, 2017 12:55 ET (16:55 GMT)