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Ford Q1 profits dragged down by warranty costs

General Motors isn't the only Detroit automaker posting falling profits in the first quarter. Ford just released its Q1 2014 financial data, and it reported a net income of $989 million, down $622 million from Q1 2013. The drop is partially blamed on higher warranty and recall expenses than the company had anticipated.
Financially, Ford suffered a rough quarter almost across the board. Its pre-tax profit of $1.4 billion was also down $765 million from a year ago. Things were even worse in the North American market where operating profit fell significantly to $1.5 billion, down from $2.392 billion in Q1 2013. However, its global revenue ticked up slightly to $35.9 billion, from $35.6 billion in this period in 2013.
Ford admitted that it spent about $900 million on expenses that it hadn't planned for during this quarter. According to Reuters, the company paid about $400 million in additional warranty and recall costs in North America. The automaker didn't explain why the costs were so much higher than expected. However, in the last three months, Ford has had several recalls, including on the 2001-2004 Escape for rust, Explorer for its steering, Edge for its fuel line and others.

Mulally will stay close to Ford after he steps down, plans to advise Fields [w/video]

Ford CEO Alan Mulally has less than a week left in his role of leading the Blue Oval before he hands off duties to Mark Fields on July 1. It doesn't look like Mulally is going to be shuffling off into his retirement anytime soon, though. The 68-year-old is being rather secretive about his next move, but he tells Bloomberg in a recent interview that he plans to stay close to Ford. Also, if Fields wants to ask for any advice, Mulally is happy to help.
Mulally took over at Ford in 2006 and led the company through a seriously rough patch in the auto industry. According to Bloomberg, he became famous or his Thursday meetings where executives were forced to deal with any problems before they could leave. Since announcing his retirement from Ford in May, Mulally has been insuring a smooth transition of power by traveling the world to all of company's major locations and saying goodbye to employees and dealers.
In terms of the future at Ford, Mulally doesn't predict any big changes in management style because the rest of the executive team is staying in place. He believes that Fields is going to maintain the processes already in place to keep things going. After all, it seems to be working. The company is predicting a return to profitability in Europe next year and is opening 88 new dealers in China. If the business could get its recalls under control, things could get even better.

Ford faces class-action lawsuit for selling vehicles without brake override systems

A total of 20 Ford customers are suing the automaker in a class-action lawsuit for selling vehicles "vulnerable to unintended acceleration." According to Reuters, the suit names 30 models built between 2002 and 2010 with electronic throttle control systems but without a brake override system. Those include the 2004-2012 F-Series pickups and the 2005-2009 Lincoln Town Car. Adam Levitt, a partner with the law firm of Grant & Eisenhofer says the plaintiffs in the case want "to be compensated for their economic losses by having overpaid for cars that contained defects." Levitt contends that the plaintiffs would not have bought their vehicles or paid less for them had they known there was no brake override system in place.
Ford began installing brake override systems in its vehicles beginning in 2010. In response to the lawsuit, Ford has pointed to research by the National Highway Traffic Safety Administration that indicated that unintended acceleration is mostly caused by driver error, saying in a statement that, "NHTSA's work is far more scientific and trustworthy than work done by personal injury lawyers and their paid experts."
Belville et al v. Ford Motor Co. will be heard in US District Court in the Southern District of West Virginia.