Ford will roll out a seventh-generation Mustang in September at the North American International Auto Show in Detroit and will unveil a heavy-duty version of the F-150 shortly afterward, CEO Jim Farley says.
Farley, discussing Ford’s second-quarter earnings with analysts, emphasizes the new Mustang and heavy-duty F-150 will be followed by other new products meant to keep the automaker’s model line fresh and appealing to a wide range of customers.
In addition, Ford is moving quickly to shore up its dominance in the commercial-vehicle segment and is tapping into new revenue streams by offering additional services. Ford’s CV sales are up year-over-year, while the new E-Transit has a 95% share of the fullsize battery-electric van market in the U.S. with more than 3,000 units sold year to date. Ford also has lined up 8,000 orders for its two-ton E-Transit van in Europe where it is the segment leader. A one-ton version will be introduced next year.
While commercial customers still overwhelmingly rely on Ford’s industry-leading ICE vans and pickup trucks, Farley says they are increasingly evaluating and adopting BEV technology.
“And vehicles represent only one part of the ‘always on’ relationships we’re creating with commercial customers,” the CEO notes. “We’re helping them reduce the total cost of vehicle ownership and make their enterprises more productive overall.”
Other manufacturers talk about getting into the van business, but Ford is there in a big way, Farley says.
Commercial vehicles are just one facet of a company moving to reshape its entire business model.
Battery-electric F-150 Lightning Pro SSV (Special Service Vehicle) purpose-built for police use.
“We absolutely have too many people in certain places,” Farley says. Ford is incredibly good at developing variations within its truck lineup, but the vehicles are too complex, and Ford Blue (the automaker’s business unit dedicated to internal-combustion engines) is tasked with reducing that complexity, he says.
The changes extend to Ford’s relations with dealers where the automaker sees a path toward reducing per-vehicle prices as much as $2,000 by cutting distribution and advertising costs.
Farley says Ford’s quality is improving but still needs to get better. “We are not satisfied,” he says, adding the automaker is working with suppliers to detect and prevent problems that have driven up Ford’s warranty order costs.
For the second quarter, Ford posted revenue of $40.2 billion on a 35% increase in wholesale shipments together with favorable pricing and vehicle mix, while adjusted earnings before interest and taxes more than tripled from a year ago to $3.7 billion – an adjusted EBIT margin of 9.3%.
Ford ended the quarter with $29 billion in cash and $45 billion in total liquidity. Based on the company’s financial strength, Ford’s board of directors declared a third-quarter regular dividend of $0.15 per share on outstanding stock.
John Lawler, Ford’s chief financial officer, says the company sees no signs of a recession in its business. The company has a robust order bank, with all 2022-model-year vehicles sold out and showroom traffic remaining strong.
Materials and logistics costs are increasing by $3 billion this year, but Ford has been able to offset the impact of inflation by raising prices. A recession in the auto industry could look quite different than in the past because Ford could afford to “give back” some price increases with rebates if affordability becomes a major issue, Lawler says.
The supply chain, however, remains an issue. The operations of 550 suppliers in Central Europe, including 130 that work directly with Ford’s North American operations, could be impacted by the rationing of energy or a cutoff of natural gas deliveries from Russia.
