Ford expenses to rise by $1 billion due to supply chain issues

Ford Motor reported components’ purchase price for the brand's vehicles is expected to hike by $1 billion in the third quarter of the year. The reason is high inflation and a shortage of parts needed for production.

Along with other automakers, the company is in its second year of slowing down, with computer chips being scarce. The pressure on the industry should have eased back in the second half of the year as forecasted. However, Ford's statement points to chaos in the supply chain, which is hurting businesses. This situation could continue through 2023.

Ford is scheduled to produce between 40,000 and 45,000 vehicles by the end of the third quarter that are unlikely to reach dealers due to a lack of components. This figure exceeds the firm's expectations. Meanwhile, in July, about 53,000 vehicles remained incomplete. 

The manufacturer warned most of the uncompleted models are trucks and sports vehicles generating a significant share of Ford's profits. 

The estimates for the coming quarter were made, with adjusted pretax earnings being determined, amounting to $1.4 - $1.7 billion. Ford, however, is sticking to its previous full-year adjusted earnings forecast of $11.5 billion to $12.5 billion, the report said. 

To reach the target, the company needs strong results in the last 3 months of 2022, particularly when considering the increased component costs from July to September. Ford is expected to report its third-quarter performance as early as October 26th.

Corporate stock price fell more than 4% after the announcement.