Ford to Spend $610 Million on Airbag Recall After Losing Appeal

Ford Motor Co., after losing an appeal to federal safety regulators this week, now must spend $610 million to replace faulty Takata airbags in 3 million cars and trucks in the U.S. and Canada.

The company is reporting the expense as a special item in its fourth-quarter results, which won’t affect its adjusted earnings, it revealed in a regulatory filing Thursday. The recalled vehicles are from model years 2006 through 2012 and include some of Ford’s best sellers of that era, such as the Fusion sedan, Edge sport-utility vehicle and Ranger pickup.

The automaker attempted to avoid the airbag recall, asserting the particular Takata inflators in its models weren’t as lethal as those that have been linked to more than a dozen deaths in the U.S. because they could propel shrapnel at drivers and passengers.

Takata was purchased in April 2018 by China’s Ningbo Joyson Electronic Corp. and renamed Joyson Safety Systems.

‘Remote’ Risks

In its filing Thursday, Ford said its own study of its airbags found “the risks identified were so remote that they were inconsequential to safety.” The National Highway Traffic Safety Administration rejected Ford’s petition Jan. 19.

“We believe our extensive data demonstrated that a safety recall was not warranted for these driver-side airbags,” Ford said in a statement Thursday. “However, we respect NHTSA’s decision and will issue a recall.”

Shares fell as much as 2.3% on the news in postmarket trading after closing up 6.2% Thursday to $11.53 -- a two-and-a-half-year high.

Ford’s stock has rallied in recent weeks due in part to the company’s exposure to the emerging electric-vehicle market, including its ownership stake in EV startup Rivian Automotive Inc. With new models like the electric Mustang Mach-E and upcoming Bronco SUV, the automaker is poised for a strong 2021.

Analysts are anticipating good news from Ford when it releases quarterly results Feb. 4. “We expect a strong 4Q20 beat for Ford,” Joe Spak, an RBC Capital Markets analyst, wrote in a Jan. 19 research note.

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