Ford Motor Co. would be in line to report a record adjusted profit this year if it weren’t for higher-than-expected warranty costs, executives said during the automaker’s Q3 earnings call on Monday.
Ford expects $10 billion in adjusted profit in 2024, the low end of its projected $10 billion to $12 billion announced earlier in the year, according to its earnings Q3 report. The company’s profit during the quarter was down $100 million YoY, which was attributed to warranty, manufacturing cost, exchange rate and net pricing.
But CEO Jim Farley said the warranty challenge is also Ford’s biggest opportunity — and it’s already seeing signs of progress.
Ford reported a 31% improvement in its three-months-in-service metric for 2024 model year vehicles when compared to the last three years, Farley said. Additionally, the company’s launch production losses were cut in half from the last year, including large-scale launches like the F-150.
“This year, the high-volume vehicle lines like the F-150 and Escape had huge launches and virtually no warranty spike,” Farley said.
The automaker also reduced warranty costs this year through 4 million over-the-air updates. Farley added that 30 different vehicle modules can now be updated via OTAs, saving customers five to six days of waiting for repairs.
“All of our improvements to warranty will take time to reduce our warranty expense — maybe up to 18 months — but we’re moving the needle on all the inputs,” he said. “We’re going to keep doing the hard yards to capture the tremendous upside costs and warranty defects present to us.”
While Ford CFO John Lawler agreed the improved warranty metrics were good signs, he is uncertain when the plague of warranty issues will subside. The automaker paid nearly $4.8 billion in warranty claims in 2023, up 15% from 2022, according to data from Warranty Week.
“I just can’t tell you when that curve is going to bend,” Lawler said during the call.
