America’s 2nd largest automaker (Ford) had a few setbacks in the 1st quarter of 2014, which held back their profits more than they had previously anticipated. The cost of warranty repairs on Ford’s older vehicles that were still covered by the factory warranty caused additional expenses that were not a part of the original forecast for this quarter. Additional factors in Ford’s declining balance sheet included an increase in factory incentives offered to consumers to entice purchasing of their brand. Ford will continue to offer rebates and finance incentives for US consumers on existing model year vehicles to prepare for their major line-up refresh coming in the 2015 model year.
Ford 1st Quarter Profits Fall Below Expectations Due To Warranty Costs
Overall, compared to where Ford was at this same time last year, they are down by approximately $600 million in profit. The good news is that the company is still well in the black, and posted up a 1st quarter profit of nearly $1 billion for North American sales alone. By the end of 2014 Ford is still anticipating a total North American profit of between $7 billion and $8 billion. Despite the company’s continued enthusiasm and their unwavering decision to stand by their vehicles consumer confidence fell slightly, causing their stock value to drop by about 2%. This amount of drop is to be expected, as many had hoped that their earnings per share should have been slightly higher.
Sales for Ford in North America have been strong, despite the additional operational costs incurred by the company. Their ability to hang on to the 2nd place spot in the sales sector has continued to strengthen their brand’s image. Ford eagerly anticipates a surge in new vehicle sales with the upcoming release of the 50th Anniversary Mustang, as well as some other refreshing redesigns of other models. With nearly 2 dozen newly designed models coming out worldwide in the 2015 model year, consumers may very well look to purchase a fresh Ford in the coming year.
To read a detailed report of Ford’s 1st Quarter Briefing visit here.
Ford 1st Quarter Profits Fall Below Expectations Due To Warranty Costs.