Tuesday, 20 September 2022 14:16

Ford Still Battling Parts Shortage, Reassures Investors

Written by William Johnson, Teslarati

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Ford continues to battle parts shortages that have plagued the global automotive industry for two and a half years.

Shares of the automaker were down more than 11% in midday trading Sept. 20, after Ford assured investors of its ability to work through the issues.


Ford published a press release stating the company is continuing to battle the ongoing parts shortage and rising parts costs due to inflation. The company now estimates up to 45,000 vehicles will be forced to wait until Q4 of this year for parts to be installed.


In terms of costs to the brand, Ford is less worried. Ford maintains yearly earnings will be between $11.5 billion and $12.5 billion; however, Q3 earnings may be more affected, now predicted to be between $1.4 and $1.7 billion. The company estimates the added inflationary costs and parts costs will total more than $1 billion in Q3.


The problem of parts shortages and inflationary pressure is nothing new for any brand in the automotive market over the past two to three years. COVID’s effect, not only on supply chains and transportation, but on supply has been felt by every brand in automotive despite incredible demand for vehicles. Ford said the most demanded vehicles in their lineup have been the most affected by this supply shortage.


These supply and revenue issues are poorly timed for legacy auto brands like Ford. Many of these companies are investing heavily in retooling and building new production facilities to feed the ever-growing demand for electric vehicles, a demand that has only been rapidly increased by consumers hearing about regulations that could ban ICE vehicles in many parts of the world.


Ford said a full Q3 earnings report will be made available in late October, and perhaps it will indicate the steps the brand is taking to tackle the supply challenges it is currently facing. In the meantime, it is unclear how the brand is combating its supply problem other than by moving vehicles to be sold later in the year.


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