Why Ford Motor Stock Rallied Despite Record Recalls
Investors fearful of the impact of tariffs in the trade war would miss out on Ford Motor (F) stock. The stock traded near $8.50 at the height of dramatic tariff rates announced on “Liberation Day.”
Ford rallied again from $10.50 to close at $11.78 last week. In the second quarter, the U.S. auto firm posted vehicle sales of 612,095. This is up by 14.2% Y/Y. Ford grew its market share, too, adding 1.8% to 14.3%.
Sales of Ford SUVs increased by 19.3%, while truck sales rose by 11%. Car sales increased by 3.2%. Thanks to a backlash in Tesla (TSLA) electric cars, Ford reported a 23.5% increase in hybrid sales, to 66,448. Still, Ford EV sales fell by 31.4% to 16,438 units.
This strong demand might not last. Consumer demand increased so that they would avoid tariffs on steel, aluminum, and on Mexico and Canada. Last week, President Trump increased the tariff threat to 35%.
Ford Recalls
Ford could be its worst enemy. In the first half of 2025, it led the industry with 88 safety recalls between January and July 4. More recently, it recalled 850,000 vehicles, which have a defective fuel pump. In 2024, warranty claims cost $6 billion. This year, such costs might fall.
Shareholders hope that quality control improves. A slowdown in auto sales due to tariffs might help. That would give Ford time to work on quality over unit sales growth.
