In the automotive market, the biggest fallout from the COVID-19 pandemic remains the ongoing chip shortage. With limited parts on hand, companies are prioritizing the most profitable models for production to shore up earnings during these shortages. Ford is not immune to the problem, with Chief Financial Officer John Lawler stating on Wednesday that the company still has 60,000 to 70,000 vehicles waiting for parts, reports the Washington Post.
Ford has been stockpiling vehicles for some time, storing many of them in the parking lots of Kentucky Speedway since mid-April. A level of relief was on the horizon in June, as Ford reported it had secured enough supply to finish and ship thousands of F-150 pickups to customers. However, it's clear that the automaker isn't out of the woods just yet, with tens of thousands of vehicles still yet to be completed. Given the just-in-time nature of modern automotive manufacturing, and the simple nature of wanting to shift product, Ford will be very eager to get the backlog of vehicles finished and shipped off to dealers. Racking up storage fees in the mean time is less than ideal, as well.
A Ford spokesperson contacted by The Drive confirmed the figures, and reiterated statements from Lawler regarding quality procedures. The company intends to ensure that the vehicles meet the same high quality standards as those that came straight off the production line. This is to be achieved with increased inspections of the vehicles prior to shipment as part of the retrofit process.
The figures were quoted on a call with media ahead of the main earnings call, where Ford reported its latest financial results to investors. Despite the ongoing issues due to the pandemic and the fire at chip supplier Renesas, Ford posted a surprise profit for the quarter. This was largely attributed to cost-cutting measures and increased transaction prices in a red-hot auto market. Revenue came in at $26.8 billion dollars, a full $3 billion above earlier forecasts, for context. The figures are strong given Ford produced 700,000 less vehicles than initially planned due to the parts shortages.
The rise in prices across the board shouldn't be underestimated, either. The average sales price of Ford vehicles in the US market rose to $47,961, a full 6.3% up over the quarter. Multiply that figure by the 60,000 to 70,000 vehicles in storage, and you get somewhere in the realm of $2.8 to 3.2 billion dollars in revenue that should flow in to Ford's coffers when the backlog is cleared.
With the Renesas plant coming back on steam and other chip suppliers working hard to stabilize supplies, the outlook ahead is positive. Executives, dealers, and the buying public alike will be keen to see the back of these supply issues, but in the meantime, there's still tens of thousands of vehicles that need to be finished. Godspeed!
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