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Automaker stocks were sinking Thursday morning after Ford Motor Co. and Jeep-maker Stellantis reported weak profits for their latest earnings periods this week.
Ford said Wednesday that its net income fell to $1.83 billion from $1.92 billion a year earlier, explaining that it put aside more cash to cover the cost of repairing customers’ vehicles under warranty, which affected profits. The Detroit automaker is well known for its history of quality control issues and has already issued 37 recalls in 2024, according to federal data. Ford was the leader in recalls for 2023 and recorded $1.9 billion in excess warranty costs.
But the company said its efforts to rein in quality issues are working, pointing to a recent J.D. Power study.
“We still have lots of work ahead of us to raise quality and reduce costs and complexity, but the team is committed, and we’re heading in the right direction,” Ford CFO John Lawler said in a statement.
Ford’s electric vehicle unit, Model E, also suffered a $1.1 billion loss from April through June. Ford cited the industry-wide pricing pressure on electric cars and lower wholesale. The automaker recently delayed plans to build a new three-row electric SUV in favor of boosting production of its F-Series Super Duty trucks.
Stellantis, which owns brands like Dodge, Chrysler, and Alfa Romeo, took a 48% hit to net profits over the first six months of 2024, reporting net profit of $6 billion (€5.6 billion). The Netherlands-based company cited costs from its restructuring plans and lower shares of foreign markets, namely North America. Adjusted operating income for the period came in at $9.2 billion (€8.5 billion), down from $15 billion (€14 billion) a year earlier.
“The Company’s performance in the first half of 2024 fell short of our expectations, reflecting both a challenging industry context as well as our own operational issues,” Stellantis CEO Carlos Tavares said in a statement.
Ford stock dropped more than 12% in pre-market trading Thursday, while Stellantis shares fell by almost 8%.
Tesla stock was down more than 1% in pre-market trading and has taken a 12% hit to shares since Tuesday, when it reported second-quarter earnings. Elon Musk’s electric vehicle maker — or artificial intelligence company, depending on who you ask — took a 45% hit to profits compared to a year earlier. Much of that profit hit came from Tesla’s move to slash prices and offer low-interest financing to boost sales and compete with similar practices from rivals, including Ford.
General Motors stock was down more than 2% in pre-market trading Thursday after it reported an unexpected loss in China and changes to its plans for self-driving unit Cruise. However, the company’s net income rose to $2.93 billion, up from $2.57 billion a year prior.