When Ford (F) posted strong Q1/2023 results, the stock fell. The strong, 21.7% Y/Y revenue growth and non-GAAP EPS of 63 cents are great data points not seen in years. Markets interpreted the bad news from the confirmed guidance of EBIT of $9 billion to $11 billion.
Ford will likely face ongoing cost issues as quality problems persist. Warranty costs will not fall until the manufacturers address key issues
Low parts quality and poor builds are hurting reliability. Ford has higher maintenance costs than GM (GM) or Stellantis (STLA).
EV Price Cuts
To compete with Tesla's (TSLA) price cuts, Ford slashed the prices of the Mach-E. It expected billions in losses for a few years before the lower price point. Expect the EV unit to feel the pressure of cutting supply costs, increasing sales volume, and increasing advertising.
Customers are not willing to spend heavily on an EV. The economic recession is around the corner. Currently, inflation hurt disposable income. This weakens the customer’s purchasing power. Instead of buying an EV, customers fix their existing cars. Magna (MGA) and Autozone (AZO) posted strong results thanks to this trend.
Used car sales will thrive as new auto sales weaken. CarMax (KMX) is rebounding as investors expect growth ahead.
