Jim Farley: We’re Number One – In Recalls

Matthew Guy
by Matthew Guy

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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Matthew Guy
Matthew Guy

Matthew buys, sells, fixes, & races cars. As a human index of auto & auction knowledge, he is fond of making money and offering loud opinions.

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  • 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.

  • W Conrad Sedans have been fine for me, but I were getting a new car, it would be an SUV. Not only because less sedans available, but I can't see around them in my sedan!
  • Slavuta More hatchbacks
  • ED I don't know what GM is thinking.I have a 2020 one nice vehicle.Got rid of Camaro and was going to buy one.Probably won't buy another GM product.Get rid of all the head honchos at GM.This company is a bunch of cheapskates building junk that no one wants.
  • Lostjr Sedans have been made less practical, with low rooflines and steeply raked A pillars. It makes them harder to get in and out of. Probably harder to put a kid in a child seat. Sedans used to be more family oriented.
  • Bob Funny how Oldsmobile was offering a GPS system to help if you were lost, yet GM as a company was very lost. Not really sure that they are not still lost. They make hideous looking trucks, Cadillac is a crappy Chevy pretending to be fancy. To be honest, I would never step in a GM show room now or ever. Boring, cheap ugly and bad resale why bother. I get enough of GM when i rent on trips from airports. I have to say, does anybody at GM ever drive what everyone else drives? Do they ever then look at what crap they put out in style fit and finish? Come on, for real, do they? Cadillac updated slogan should be " sub standard of the 3rd world", or " almost as good as Tata motors". Enough said.