Ford's Strategy: Addressing Safety Recalls and Investor Concerns

Impact on Financial Performance

Ford's financial performance in Q2 2024 was significantly impacted by increased warranty reserves and higher warranty costs, primarily due to safety recalls. Despite these challenges, Ford reported a 12% revenue growth driven by higher truck volume and product strength, and remains confident in reducing losses and sustaining profitability across all vehicle types.

"On July 24, 2024, after the market closed, Ford announced second quarter 2024 financial results, revealing that the Company's "[p]rofitability was affected by an increase in warranty reserves" and "higher warranty costs."" --- (F, press release, 2024/08/09)

"Costs were up year-over-year, primarily reflecting an increase in warranty reserves, higher new product-related material costs and higher manufacturing costs.Now if you take a step back and look at our sequential performance, Q2 saw revenue growth of 12% on a 9% increase in wholesales, driven by higher truck volume and the strength of our product portfolio." --- (F, earning call, 2024/Q2)

"And what we're so far seeing is, we avoided about 12 recalls on F-150. And we're seeing the best performance on 3 MIS after a launch in a long time." --- (F, earning call, 2024/Q1)

"The Ford class action lawsuit further alleges that on July 24, 2024, Ford announced second quarter 2024 financial results, revealing that Ford's "[p]rofitability was affected by an increase in warranty reserves" and "higher warranty costs."" --- (F, press release, 2024/08/12)

"Thankfully, we scaled years ago. We are confident we can reduce the losses and sustain a profitable business in the future with everything we've known. We look forward to proving that we can be profitable on smaller vehicles as well, not just on EVs, but across all of our powertrain choices." --- (F, earning call, 2024/Q2)

Investor Relations and Addressing Concerns

Ford is committed to maintaining a strong balance sheet and growing cash positions, with plans to return value to shareholders if growth opportunities are limited. Additionally, the company is addressing investor concerns through strategic financial decisions and by providing avenues for legal recourse in ongoing class action lawsuits.

"But we've also been very clear that as our balance sheet remains strong and as our cash positions continue to grow that if we don't have those opportunities for accretive growth and investments that we will look to return more to our shareholders." --- (F, conference, 2024/06/11)

"Robbins LLP reminds investors that a shareholder filed a class action on behalf of all persons and entities that purchased or otherwise acquired Ford Motor Company (NYSE:F) securities between April 27, 2022 and July 24, 2024." --- (F, press release, 2024/08/13)

"Ford investors have until October 7, 2024 to file a lead plaintiff motion. Investors suffering losses on their Ford investments are encouraged to contact the Law Offices of Howard G. Smith to discuss their legal rights in this class action at 888-638-4847 or by email to howardsmith@howardsmithlaw.com." --- (F, press release, 2024/08/09)

"Investors suffering losses on their Ford investments are encouraged to contact the Law Offices of Howard G. Smith to discuss their legal rights in this class action at (215) 638-4847 or by email to howardsmith@howardsmithlaw.com." --- (F, press release, 2024/08/13)

"• Cash effects related to the restructuring of our business • Strategic acquisitions and investments to grow our business, including electrification Subject to approval by our Board of Directors, shareholder distributions in the form of dividend payments and/or a share repurchase program (including share repurchases to offset the anti-dilutive effect of increased share-based compensation) may require the expenditure of a material amount of cash." --- (F, sec filing, 2024/Q1)

Future Preventive Measures and Safety Enhancements

Ford is enhancing safety through real-time driver coaching, OTA updates to address defects, and integrating talent into legacy systems to improve safety products.

"We offer real-time driver coaching, which provides significant improvements for driver safety and now is available in about half of our modem-enabled Pro vehicles. This includes features like seatbelt and speed monitoring and harsh braking notification." --- (F, earning call, 2024/Q2)

"What we've found though is that this kind of fixing is different than mechanical fixes, where that OTA capability redirected to these defects can really reduce our cost outlays for the warranty -- against the warranty reserves." --- (F, earning call, 2024/Q2)

"So I'm not going to try to be convincing. I think the most important thing is to have talent and to have that talent be heavily integrated into the legacy part of the company because we have a safety product." --- (Ford, conference, 2024/05/30)

Regulatory Compliance and Safety Standards

Ford is addressing regulatory compliance and safety standards by leveraging credits and potentially modifying product offerings to meet requirements. Additionally, the 2025 Ford Police Interceptor Utility includes standard safety features to enhance officer safety and productivity.

"In addition, slower-than-anticipated development of the electric vehicle market may impact our strategy to comply with regulatory standards, and, in some cases, we plan to utilize credits purchased from third parties to demonstrate regulatory compliance or we may need to modify our product offerings." --- (F, sec filing, 2024/Q2)

"Mary Barra: Yes. We definitely will be looking for, frankly, more than just what the vehicle is, but to have the right regulatory environment to release this technology that we believe definitely improved safety of miles traveled for everyone." --- (GM, earning call, 2024/Q2)

"Safety On the Beat The 2025 Ford Police Interceptor Utility comes standard with features designed to help ensure officer safety and productivity." --- (F, press release, 2024/08/07)

"Mary Barra: Sure. Well, for General Motors to comply with the existing regulations, we have many levers that we can pull, including how we plan our portfolio, the technology that we use on the vehicles." --- (GM, earning call, 2024/Q2)

"Remember, because the Origin doesn't have steering wheels and some other motor vehicle safety standard components, it doesn't meet motor vehicle safety standards." --- (GM, earning call, 2024/Q2)

Technological Innovations in Vehicle Safety

Ford is focusing on enhancing vehicle safety through advanced driver-assistance systems like BlueCruise, while also investing in electrical architectures across EVs, ICE, and hybrid vehicles. This strategy aims to supercharge their business and improve safety features, addressing both customer needs and investor concerns.

"I'm going to comment on our EV landscape and strategy, software technology and services that are growing importance at Ford, our Ford Pro business and quality. On electrification, we've been very vocal about why electric vehicles are so important and a great choice for customers and businesses." --- (F, earning call, 2024/Q2)

"And we do have a lot of cars. So inevitably, when there are a lot of cars and you've got you know, billions of miles, you do have the law of large numbers where, okay, there's a small chance of something bad happening, but when you look at the sort of safety per mile, because we've got a lot of miles, it's very clear that the safety per mile is better than human driving." --- (TSLA, event transcript, 2024/06/13)

"We are earning more than $2,000 in revenue for every Super Cruise equipped vehicle we sell and we're expanding availability to vehicles like the Chevrolet Traverse and we have made great progress reducing the cost of the system which opens the door to further scaling." --- (GM, event transcript, 2024/06/04)

"And those design changes are trying to be implemented as we get the new model year changeover in the second half and as we bring vehicles online in the second half." --- (F, earning call, 2024/Q1)

"We are basically, you know, productivity on Pro as well as BlueCruise. And to take that to the next level, make that business supercharged, we need to invest heavily in electrical architectures, not just on our EVs, but also in our ICE vehicles and hybrid vehicles." --- (F, earning call, 2024/Q2)