Ford Motor Co. on Thursday reported 2022 adjusted earnings before interest and taxes (EBIT) of $10.4 billion, up from $10 billion in 2021. For the fourth quarter alone, Ford reported EBIT of $2.6 billion compared with $2 billion a year ago.
John Lawler, Ford chief financial officer, said in a news media call the company fell short in productivity and efficiency that left about $2 billion on the table, “below our expectations.”
Ford CEO Jim Farley told industry analysts after the earnings release, “To say I’m frustrated is an understatement.”
The company must improve quality and lower costs, the top executives said.
For the year, the Dearborn automaker reported revenues of $158 billion, up from $136.3 billion in 2021. For the fourth quarter, Ford reported revenues of $44 billion compared with $37.7 billion a year ago.
This year will be “pivotal,” Farley said in a news release. “We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.”
Ford’s net income was $1.3 billion for the fourth quarter and a net loss of $2 billion for the year, due to special charges related to Rivian and Argo divestments, the company said.
What created headaches
In third quarter earnings, Ford said it had “about 40,000 ‘vehicles on wheels’ — built, but awaiting needed parts — in inventory at the end of September” and about $1 billion in higher-than-expected supplier payments, Ford said.
On Thursday, Lawler said the company had reduced the number of vehicles needing parts by the end of the year but costs related to materials and shipping presented challenges. Productivity remained an issue.
Bronco production remains slower than hoped.
Fewer bargains, big price hikes in Q4
Ford continues to see its average transaction prices climb while incentives sought by bargain hunters dropped. Buyers spent an average of $55,737, up from $54,008 per vehicle compared with $40,000 in 2017, according to Cox Automotive. Each brand had an increase to its highest level for any fourth quarter, Cox said.
The Transit commercial van saw the biggest gain, up 15% to $54,355. F-Series jumped 10% to $65,858. Other highlights included the electric Mustang Mach-E, which had an average transaction price of $59,431.
Ford slashed incentives by 56% to an average of $1,069 per vehicle, according to Cox Automotive calculations. Before the chip shortage, customers could save more than $4,000 per vehicle with incentives.
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Lincoln chopped incentives by 45% to an average of $2,301 per vehicle, also the lowest in years by a wide margin. Before the chip shortage, Lincoln typically spent more than $7,000 on average per vehicle.
Lincoln’s average transaction price rose 4% to $66,124, driven primarily by Nautilus, which saw a 4% increase to $56,614. The Aviator averaged $72,680 and the Corsair averaged $46,427.
Ford sold 479,769 vehicles, down 5% from the year before. It was the first time in the past six years that sales fell below the 500,000-unit mark, Cox noted.
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“Ford’s all-important F-Series, which accounts for most of Ford’s sales and profits, slipped by 2% to 186,650 trucks,” said Michelle Krebs, executive analyst for Cox Automotive, “Still, the F-Series was the No. 1 selling pickup truck in the U.S. for the 46th straight year.”
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Unhappy customers, slow vehicle deliveries in 2022
Ford has said it’s building as quickly as production allows. Order banks are full and shut down. Customers are waiting, some patiently and some not so patiently. Managing customer expectations is essential to the process. People are waiting for Mavericks, F-150 Lightnings and Broncos.
The company sent letters offering a $2,500 deal to frustrated customers tired of waiting for certain high-end Bronco SUVs that are on order but delayed because of the ongoing global supply chain disruption.
The letters, which landed in mailboxes last month, told Bronco customers they may take no action and continue to wait or accept the rebate to change a 2023 Wildtrak order to an Outer Bank, Big Bend or Badlands series without a molded-in colored hardtop, Sasquatch package or Lux package that allows for more extreme adventure driving.
Bronco owner Jay Takashima, of Portland, Oregon, waited more than two years for his vehicle and wrote on the Bronco 6X Facebook page Thursday, “This entire rollout has been horrible.”
Bronco owner Steve Frazier responded, “Ford has went way overboard with their screw-ups on the Bronco release. Almost unbelievable.”
John Russell wrote, “The only thing holding back Bronco sales is their inability to build them.”
Chip Hill wrote, “They could be selling 4 times as many, Jeep should be thankful.”
He added, “I got a letter from ford, my reservation was canceled, odd, been in my garage for 3 months now. What, WHAT are they doing in Dearborn.”
Apart from slow deliveries, Ford still seems to be cutting into Jeep sales, achieving its stated goal.
Meanwhile, reducing warranty costs, recall costs and lawsuits continues to be a challenge for Ford. These are what the industry calls self-inflicted costs that consistently cut into the profit margin.
“Ford underperformed the U.S. market in the quarter with a sales decline when the overall market was up, causing a share loss,” said Cox’s Krebs.
Detroit Three
General Motors on Tuesday reported pretax profit gains of $1 billion in the fourth quarter to $3.79 billion. For the full-year, pretax profits rose to $14.5 billion compared with $14.3 billion in 2021. GM said it incurred a special charge of $511 million in the fourth quarter related to a buyout program for its Buick dealers. It also took a special charge of $657 million for closing its operations in Russia, according to Free Press reports.
Stellantis, which owns Chrysler, Jeep and Ram Trucks, reports its data later this month.
GM, which owns the Chevrolet, Buick, GMC and Cadillac, reported net income rose to $1.9 billion compared with $1.7 billion. GM held its title as the top-selling carmaker in the United States in the fourth quarter with total U.S. sales rising 41.4% year-over-year to 623,261 vehicles. All of GM’s brands reported sales gains except for Buick.
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Free Press staff writer Jamie L. LaReau contributed to this report.
Contact Phoebe Wall Howard: 313-618-1034 or phoward@freepress.com. Follow her on Twitter @phoebesaid.