Jim Farley: We’re Number One – In Recalls

Matthew Guy
by Matthew Guy

jim farley were number one in recalls

It is a breath of fresh air to have someone like Jim Farley at the helm of an automaker. The man brings a bracing level of candor to a world generally filled with sanitized PR statements and corporate double-speak. In a candid call with investors, the CEO lamented about how Ford has been “number one in recalls” and the need “to improve product quality”.

These remarks come on the heels of Ford releasing its annual earnings report, one showing the Blue Oval had a net loss of $2 billion in the 2022 calendar year.

"While we generated a record cash flow,” Farley said, “We left about $2 billion of profit on the table due to costs and especially continued supply chain issues.”

However, unlike most other corner office execs, he refused to lay all troubles at the feet of that easy scapegoat.

"Ford has been the number one in recalls in the U.S. for the last two years," he told industry analysts after releasing the earnings report. "Clearly that's not acceptable." 

John Lawler, numbers wonk chief financial officer for Ford, estimated that successfully addressing some of the company’s quality woes could return billions on the balance sheet.

“With our quality numbers where they're at, we've said we have a significant opportunity on warranty,” he said, speaking to the potential to improve cost structure in that part of the company by about $2 billion. “That'll come in over time as quality improves,” Lawler explained.

So they’re nothing if not realistic. Elsewhere, Lawler detailed that the company is in good shape in terms of being able to keep the lights on despite last year’s performance, holding about $32 billion in cash and $48 billion in liquidity. Some of the losses in 2022 apparently came from sour investments, writing down its investments in Rivian by $7.4 billion and Argo AI by $2.8 billion last year. These numbers are making your author’s head hurt.

In sum, Ford says revenue rose about 16 percent last year to $158 billion, mainly thanks to better average transaction prices. They sold 4.2 million vehicles worldwide, up from 3.9 million in 2021, so the losses are not for want of customers. In fact, if not for these so-called ‘special expenses’ – which include the staggering losses relating to Rivian and Argo AI – those holding the spreadsheets say Ford would have posted a $10.4 billion profit rather than a $2 billion loss.

Execs remain bullish on many parts of the company, of course. An estimated 60 percent of Ford’s electric vehicle customers are new to the brand, with their EV growth coming at about twice the rate of the EV segment in general. Talent in software is said to have resulted in an outsized performance at that part of the company, and robust cashflow on the gas-powered side of the ledger means those vehicles are contributing profits and growth.

[Image: Ford]

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3 of 57 comments
  • BklynPete BklynPete on Feb 06, 2023

    Maverick has had recalls but overall seems reliable. Consumer Reports recommends it for whatever that's worth, buyers think they're better than sliced bread, they're sold out, and look like a long-term success.

    I suppose you're right that DCT can be laid at Mulally's feet too but as COO Fields was in charge of product. When he got Mulally's job, Fields brought back mgmt siloes and lost shareholder value. Maybe Fields took the fall for other's bad decisions. But ultimately as CEO the axe had to land on him. I cannot believe that Farley won't meet the same fate if 2023 warranty claims make Ford lose money again.

    • Analoggrotto Analoggrotto on Feb 07, 2023

      Consumer Reports has been sucking up hard to Fjord for decades, I doubt anybody takes their automotive stats very seriously anymore.

  • BklynPete BklynPete on Feb 07, 2023

    Oh really? I don't recall the Fiesta and Focus getting recommendations when saddled with that awful DCT. Nor are the last generation Taurus or current Explorer and Escape on their recommended lists.

  • Kwik_Shift I like, because I don't have to look at them. Just by feel and location while driving.
  • Dwford This is the last time we are making these, so you better hurry up and buy (until the next time we make them, that is)
  • FreedMike @Tim: "...about 40 percent of us Yanks don't live in a single-family home."Keep in mind that this only describes single family **detached** homes. But plenty of other house types offer a garage you can use to charge up in - attached single family homes (townhouses, primarily), or duplex/triplex/four-plexes. Plus, lots of condos have garages built in. Add those types of housing in and that 40% figure drops by a lot. Regardless, this points out what I've been thinking for a while now - EV ownership is great if you have a garage, and inconvenient (and more expensive) if you don't. The good news if you're looking for more EV sales is that there are literally hundreds of millions of Americans who have garages. If I had one, I'd be looking very closely at buying electric next time around.
  • Matthew N Fanetti I bought a Silver1985 Corolla GTS Hatchback used in 1989 with 80k miles for $5000. I was kin struggling student and I had no idea how good the car really was. All I knew was on the test drive I got to 80 faster than I expected from a Corolla. Slowly I figured out how special it was. It handled like nothing I had driven before, tearing up backroads at speeds that were downright crazy. On the highway I had it to about 128mph on two occasions, though it took some time to get there, it just kept going until I chickened out. I was an irresponsible kids doing donuts in parking lots and coming of corners sideways. I really drove it hard, but it never needed engine repair even to the day I sold it in 1999 with 225000 miles on it, still running well - but rusty and things were beginning to crap out (Like AC, etc.). I smoked a same year Mustang GT - off the line - by revving up and dumping the clutch. Started to go sideways, but nothing broke or even needed attention. Daily driving, only needed the clutch into first. It was that smooth and well-synced. Super tight, but drivable LSD. Just awesome from daily chores to super-fun.To this day I wish I had kept it, because now I have the money to fix it. It is hard to explain how amazing this car was back in the day - and available to people with limited money - and still the highest quality.
  • Cprescott Well, duh. You will pay more to charge a golf cart than an ICE of the same size if you charge externally. Plus when you factor in the lost time, you will pay through the nose more than an ICE on lost opportunity costs. Golf car ownership savings is pure myth.