Ford Gets Huge Win
The White House says it will change its policy on tariffs for the auto industry. Even if so, most of Ford’s strategic problems will remain. The post Ford Gets Huge Win appeared first on 24/7 Wall St..
Ford Motor Co. (NYSE: F) CEO Jim Farley said Chinese electric vehicles (EVs) could decimate his company. Trump administration tariffs on cars and car parts made overseas could be nearly as bad. Bowing to pressure from one of the biggest sectors of the U.S. economy, the White House will change its policy on tariffs for the industry. Ford and General Motors have gotten some relief.
24/7 Wall St. Key Points:
-
The White House says it will change its policy on tariffs for the auto industry.
-
Even if so, most of Ford Motor Co.’s (NYSE: F) strategic problems remain.
-
Take this quiz to see if you’re on track to retire. (sponsored)
Commerce Secretary Howard Lutnik said, “President Trump is building an important partnership with both the domestic automakers and our great American workers.” It is also a tacit move to show that Trump supports big labor. In this case, that is the United Auto Workers.
It may not be that the help to the industry is clear cut. It may be that car companies will pay tariffs on cars and parts, but none on the aluminum and steel used to build them. The math behind the dollar sum is hard to come by. However, industry management was happy. GM’s CEO said, “We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy.”
Ford’s Challenges
Ford recently told dealers they needed to be prepared for large auto price increases in June. In the meantime, Ford has offered “employee pricing,” which offers customers the price that Ford changes its employees.
Ford faced two hurdles when the tariffs were first announced. Although many of its cars are made in the United States, the prices on some of these vehicles could have gone up several thousand dollars. And tariffs could affect the pace at which cars and parts come from Mexico and Canada. Supply chain challenges, therefore, are another reason that dealers might be short on inventory.
Ford is already fighting a multi-front war. It wants to be a leader in the U.S. EV business. Despite billions of dollars invested, it has a single-digit market share of the sector. Ford said it will lose $5.0 billion to $5.5 billion on EVs this year. That means that Ford has had to pivot back to its gasoline-powered vehicles to keep even modest profits. It has some hybrids that sell well, but they are a small number of the vehicles Ford sells every month.
Most of Ford’s strategic problems remain, and this shows up in its stock price. It is about the same as six months, though it has outperformed the broader market in that time.
These Countries Could Hurt the US the Most in a Trade War
The post Ford Gets Huge Win appeared first on 24/7 Wall St..
