Ford Admits It’s Wasting Money On Incentives And Is Eying Build-To-Order

A new production strategy could be coming.

The ongoing global chip shortage is causing major financial losses for many automakers, including Ford which is losing ground at both sides of the big pond in terms of sales and deliveries. Nevertheless, the Blue oval company registered a $1.5-billion increase in the operating profit for the second quarter of the year thanks to more sales of expensive SUVs and trucks. Ford has a few more levers to pull, and boss Jim Farley knows where to look at.

In a recent interview with Reuters, Farley admitted Ford is losing money from incentive campaigns and combating that might require a change in the manufacturer’s production strategy. Rather than building vehicles made to standard specifications, the automaker wants to shift to building vehicles to order and cut inventories.

“I know we are wasting money on incentives,” Farley told the publication. “I don’t know where. We are really committed to going to an order-based system and keeping inventories at 50 to 60 days’ supply.”

Ford is not the most generous automaker when it comes to incentives but it’s still wasting millions on different discounts for the customers. Most recently, the automaker announced it will give a $1,000 bonus to shoppers from the brand willing to wait until their product arrives. 

Despite the production interruptions, Ford is reporting an operating profit of $1.1 billion, which leads to an adjusted forecast of between $9 billion and $10 billion earnings before interest and taxes. The chip shortage resulted in about 700,000 units of production lost during the second quarter of the year but Ford is confident it is “spring-loaded for growth,” as John Lawler, Ford CFO, told reporters during a conference call.



Source: Read Full Article