Release Date: May 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ford Motor Co (F, Financial) achieved its best first-quarter US pickup sales in over 20 years, indicating strong demand for its vehicles.
- The company delivered $1 billion in EBIT, exceeding expectations of roughly breakeven for the quarter, driven by cost improvements and strong net pricing in North America.
- Ford Pro continues to be a competitive advantage, with strong demand for key products and growth in software subscriptions, which rose by 20% year over year.
- Ford and Lincoln were the most improved brands in J.D. Power's 2025 US Vehicle Dependability Study, highlighting improvements in quality.
- The company is on track to deliver $1 billion in net cost reductions this year, excluding the impact of changes in tariff policy.
Negative Points
- Ford Motor Co (F) suspended its full-year 2025 guidance due to uncertainties related to tariffs and potential industry-wide supply chain disruptions.
- The company estimated a gross adverse EBIT impact of $2.5 billion and a net adverse EBIT impact of $1.5 billion for full-year 2025 due to tariffs.
- Ford experienced a 7% decline in wholesales and a 5% decrease in revenue to $41 billion, partly due to planned downtime at several plants.
- The company faces potential challenges from competitors' responses to tariffs and related market dynamics, which could impact pricing and volume.
- Ford is dealing with uncertainties associated with tax and emissions policy, which could affect future operations and profitability.
Q & A Highlights
Q: Can you provide more details on the $2.5 billion gross tariff headwinds and the $1.5 billion net impact?
A: Sherry House, CFO, explained that the $2.5 billion gross cost is split roughly between parts and imported vehicles, including steel and aluminum pricing impacts. The net impact of $1.5 billion includes about $1 billion in offsetting recovery actions, primarily through market equation optimization and cost mitigation strategies.
Q: How do you expect volume and inventory to play out given the current market dynamics?
A: Andrew Frick, President of Ford Blue and Model e, noted that the industry is performing strongly, with a first-half SAAR over 17.5 million. Ford expects industry pricing to rise by 1% to 1.5% in the second half, with a full-year pricing flat. They anticipate a SAAR of around 15.5 million units in the second half, with inventory levels allowing Ford to be opportunistic in the market.
Q: Are there any signs of supply chain disruption due to tariffs?
A: Kumar Galhotra, COO, mentioned that while there is potential for disruption due to tariff policy volatility, Ford has not yet experienced significant issues. However, complexities in importing rare earth materials from China could pose risks.
Q: How is Ford handling the impact of tariffs on Ford Credit and the potential for higher used vehicle prices?
A: Cathy O'Callaghan, CEO of Ford Credit, indicated that higher new vehicle prices could support auction values, although this might be offset by a potential economic slowdown. Ford Credit is seeing an increase in applications for longer-term financing, and overall, they maintain a balanced outlook.
Q: What are Ford's plans for Level 3 autonomy and changes in electrical architecture?
A: James Farley, CEO, stated that Ford is on track with Level 3 autonomy and evaluating Level 4. The company has merged its electric architectures to improve efficiency and reduce costs, with the new FNV3 architecture expected to enhance software delivery and product affordability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
