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1 Thing Ford Must Get Right for Investors in 2025
FFord Motor(F) The Motley Fool·2024-12-23 09:55

Core Insights - Ford is facing significant challenges with high warranty costs and quality issues, which have negatively impacted its earnings per share and overall attractiveness to investors [1][5][10] - The company has the second-highest number of recalls in 2024 among automakers, with 62 recalls, trailing only Stellantis [2][12] - CEO Jim Farley emphasizes that improving quality is a top priority, and the company is making operational improvements to address these issues [4][9] Group 1: Quality and Recalls - Ford's recall issues are exemplified by a recent recall of its F-150 truck due to a rear axle defect, which could lead to serious safety concerns [7] - The company has a history of leading the industry in recalls for three consecutive years, resulting in a 165millioncivilpenaltyfromtheNHTSAfornon−compliancewithfederalrecallrequirements[12][13]−Anewheadofqualitywillbeappointedtohelpexecutestrategiesaimedatreversingrecallsandreducingwarrantycosts,withthecurrentheadofqualitytransitioningtooverseevehicleprograms[13]Group2:FinancialPerformanceandMarketPosition−Ford′sstockhasdecreasedbyapproximately20165 million civil penalty from the NHTSA for non-compliance with federal recall requirements [12][13] - A new head of quality will be appointed to help execute strategies aimed at reversing recalls and reducing warranty costs, with the current head of quality transitioning to oversee vehicle programs [13] Group 2: Financial Performance and Market Position - Ford's stock has decreased by approximately 20% year-to-date, contrasting sharply with GM's nearly 40% gain, raising questions about its investment appeal despite a 6.1% dividend yield [10] - Warranty expenses increased by 800 million in the second quarter compared to the previous year, primarily due to issues from vehicles launched in 2021 or earlier [9] - The company is restructuring its European operations, including plans to lay off 4,000 employees by 2027, while also facing competition from low-cost electric vehicle manufacturers in China [5]