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    F
    Earnings call· Mar 2025(Q1 FY25)

    FORD MOTOR Q1 FY25 earnings call F

    May 5, 2025 Source

    Executive summary

    Ford Motor Company Q1 FY25 — Strong Q1 Performance Despite Tariff Headwinds

    Ford delivered strong first-quarter results, surpassing expectations with $1 billion in EBIT, driven by cost improvements and robust pricing. However, the company has suspended its full-year guidance, citing significant uncertainties from tariffs, which are projected to have a $1.5 billion net adverse EBIT impact for FY25. Ford emphasizes its substantial U.S. manufacturing footprint as a key competitive advantage in navigating the evolving policy landscape and market dynamics.

    Highlights

    5

    • Delivered $1 billion in EBIT, exceeding original expectations of roughly breakeven for the quarter.

    • Achieved the best first quarter U.S. pickup sales in over 20 years, with sequential share growth in the home market.

    • Ford Pro paid subscriptions rose to 675,000, up 20% year-over-year, with average revenue per unit (ARPU) growing 40%.

    • Model e wholesale volumes more than doubled year-over-year, driven by recent launches of Explorer, Capri, and Puma Gen-E in Europe.

    • On track to deliver $1 billion in net cost reductions for FY25, excluding tariff impacts, marking the third consecutive quarter of year-over-year cost improvement.

    Concerns

    4

    • Suspended full-year 2025 guidance due to material tariff-related near-term risks and policy uncertainties.

    • Estimated a net adverse EBIT impact of $1.5 billion for full year 2025 due to tariffs.

    • Expected industry SAAR to run about 0.5 million units lower in the second half of 2025 (around 15.5 million units) due to potential pricing increases.

    • Anticipates potential industry-wide supply chain disruptions and competitive responses due to tariff volatility.

    Guidance & targets

    1
    CategoryTargetConfidence
    Full-year 2025 EBIT guidance
    Suspended
    high materiality
    Low

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Ford Pro
    Maintained segment leadership in North America and grew commercial brand leadership in Europe despite planned downtime and normalization in industry pricing for commoditized areas.
    North America Class 1-7 truck and van market share: over 40%Paid subscriptions: 675,000Paid subscriptions growth YoY: 20%Telematics subscriptions growth: 80%Average revenue per unit (ARPU) growth: 40%Customer paid mobile repair orders as % of total: 7%
    		———solid quarter
    Ford Model e
    Focused on improving gross margin and capital discipline. Doubled Q1 wholesale volumes driven by new launches (Explorer, Capri, Puma Gen-E in Europe). U.S. retail sales grew 15% due to the Power Promise campaign.
    Wholesale volumes growth YoY: more than doubledU.S. retail sales growth: 15%Ford Power Promise campaign attach rate: 34%
    		———loss
    Ford Blue
    Earned a modest profit despite expected volume decline and adverse FX, offset by higher net pricing in North America and cost reductions. International operations were collectively profitable.
    Hybrid mix of global sales increase: 250 basis pointsBronco sales growth: 35%Expedition/Navigator average transaction prices vs outgoing model: 18% and 23% higherExpedition/Navigator dealer turn days: less than 9 days
    		———modest profit
    Ford Credit
    Delivered a solid quarter with significantly higher EBT, reflecting a high-quality book of business, higher financing margin, and higher net receivables. Also paid a $200 million distribution to the automotive company.
    Distribution to automotive company: $200 millionFirst quarter option values increase YoY: 3%First quarter option values increase sequentially: 4%
    		———EBT up significantly

    Operational metrics

    20
    Adjusted EBIT
    $1 billionexceeding expectation of roughly breakeven
    Q1 FY25

    Exceeded original expectation for the quarter, driven by cost progress and strong net pricing in North America.

    Net cost reductions
    $1 billionon track to deliver
    FY25

    On track to deliver year-over-year cost improvements, excluding the impact of changes in tariff policy.

    Warranty savings
    on track to deliver year-over-yearpositive versus plan
    FY25

    Warranty spikes during launch are now at industry-leading levels. Q1 warranty was better than planned and positive quarter-over-quarter.

    Repairs per thousand (0 months in service)
    greater than 10%improvement
    FY25

    On track to deliver greater than 10% improvement in repairs per thousand for 0 months in service for '25 vehicles.

    Repairs per thousand (3 months in service)
    greater than 10%improvement
    FY25

    On track to deliver greater than 10% improvement in repairs per thousand for 3 months in service for '25 vehicles.

    OTA deployments
    9.5 million
    Q1 FY25

    Deployed 9.5 million OTAs in the first quarter to address customer concerns.

    Tariff financial impact mitigation
    nearly 35%lowered potential impact by
    Q1 FY25

    Actions taken in Q1 lowered the potential financial impact of tariffs by nearly 35%.

    U.S. manufacturing investment
    $50 billion
    since 2020

    Invested $50 billion in manufacturing capacity since 2020, including battery and manufacturing capacity in Tennessee, Kentucky, Michigan, and Ohio.

    Wholesales
    down 7%YoY
    Q1 FY25

    Resulted from planned downtime at several plants to support product launches and rebalancing U.S. dealer inventory.

    Revenue
    $41 billiondown 5%
    Q1 FY25

    Down 5% YoY, impacted by lower wholesales.

    Cash and liquidity
    $27 billion cash, $45 billion liquidity
    as of March 31

    Strong balance sheet provides flexibility for dynamic environment and shareholder distributions.

    Corporate credit facilities
    $18 billionrenewed for another year
    April 2025

    Renewed $18 billion corporate credit facilities for another year in April.

    Regular dividend per share
    $0.15
    Q2 FY25

    Declared a regular second quarter dividend, payable on June 2 to shareholders of record on May 12, consistent with commitment to return 40-50% of trailing FCF.

    Industry pricing increase
    1% to 1.5%
    H2 FY25

    Expected industry pricing increase in the second half of the year due to tariffs.

    Full year industry pricing
    flat
    FY25

    Expected to be flat for the full year.

    Industry SAAR
    15.5 million units0.5 million units lower than original plan
    H2 FY25

    Expected to run lower in the second half of the year due to potential pricing increases.

    Dealer stock day supply
    56 days
    as of April

    Ford's dealer stock day supply at the end of April.

    Gross dealer stock supply
    66 days
    as of April

    Ford's gross dealer stock supply at the end of April.

    BlueCruise miles driven
    above 370 million
    to date

    Cumulative miles driven with BlueCruise, indicating strong adoption.

    BlueCruise hands-free miles driven growth
    15%up
    recent

    Increase in hands-free miles driven with BlueCruise, indicating growing customer comfort and usage.

    Industry KPIs

    6
    MetricValueDetails
    Warranty recall costspositive
    Average transaction price18% and 23% higher%
    Autonomous robotaxi metricsabove 370 millionmiles
    Vehicle deliveries wholesalesdown 7%%
    Dealer inventory days of supply56 daysdays
    Ev unit volumes mix segment economicsmore than doubled%

    Product announcements

    5
    ProductTypeDetails
    Expedition and Navigatorlaunch
    Puma Gen-Elaunch
    Ranger Plug-In Hybrid EVlaunch
    Explorer (electric), Capri (electric)launch
    BlueCruise 1.4 and 1.5launch

    Risks & headwinds

    7
    Net adverse EBIT impact from tariffsFY25

    $1.5 billion for full year 2025

    Mitigation: Market equation optimization (segment-by-segment, channel-by-channel analysis), cost mitigation actions (e.g., bonded carriers for transit goods), assessing near-term resourcing for U.S. content.

    Industry-wide supply chain disruptionnear-term

    potential

    Mitigation: Monitoring policy changes, leveraging U.S. footprint, working with partners on AI for efficiency.

    Future or increased tariffs in the U.S.near-term

    potential

    Mitigation: Engagement with policymakers to understand impacts, leveraging Ford's U.S. manufacturing advantage.

    Retaliatory tariffs and other restrictions by other governmentsnear-term

    potential

    Mitigation: Monitoring global policy, leveraging existing trade relations (e.g., China as export hub for ASEAN, Australia, South America).

    Policy uncertainties associated with tax and emissions policynear-term

    potential

    Mitigation: Engaging with lawmakers and administration, advocating for policies like the Production Tax Credit (PTC) in IRA.

    Industry SAAR declineH2 FY25

    0.5 million units lower than original plan (15.5 million units)

    Mitigation: Opportunistic market actions, aggressive marketing (employee pricing), leveraging strong product lineup and inventory.

    Pricing pressure from import competitors in vans and heavy-duty pickupsH2 FY25

    some

    Mitigation: Monitoring competitive landscape, leveraging U.S. production advantage against tariff-exposed imports.

    What to watch in Q2 FY25

    5

    Full-year 2025 EBIT guidance

    Q2 earnings call
    CurrentSuspended
    TargetReinstatement of guidance with updated range

    Why it matters

    Reinstatement of guidance will provide clarity on the company's financial outlook amidst tariff uncertainties.

    We will provide an update on guidance during the Q2 earnings call.

    Q&A highlights

    5

    What comprises the $2.5B gross tariff headwind and the $1B offset actions?

    Gross impact is roughly half parts and half imported vehicles, inclusive of steel/aluminum pricing impacts and the 3.75% offset. Offsets are primarily 'market equation optimization' considering competitive dynamics and Ford's U.S. production advantage, plus some cost mitigation actions.

    “For us, we're estimating that it's roughly half parts and half imported vehicles. We have assumed that we would get credit for the U.S. content in our vehicles that are going to be going over the border. So that is already assumed in this $2.5 billion.”

    asked by Emmanuel Rosner · answered by Sherry House

    2 min read5 chapters

    Detailed Narrative

    01

    Tariff Impact and Mitigation Strategy

    Ford estimates a gross adverse EBIT impact of $2.5 billion and a net impact of $1.5 billion for FY25 due to tariffs. This includes roughly half from parts and half from imported vehicles, with the 3.75% offset already factored in. Mitigation actions include using bonded carriers for vehicles and parts transiting the U.S. and assessing near-term resourcing to increase U.S. content. The largest element of the offset is market equation optimization, considering competitive dynamics and Ford's U.S. production advantage.

    02

    Cost and Quality Progress

    The company remains on track to deliver $1 billion in net cost reductions in FY25, excluding tariffs, driven by improved production stability, strengthening the supply base, and rigorous process inputs. Warranty savings are on track, and the company saw a greater than 10% improvement in repairs per thousand for 0 and 3 months in service for 2025 vehicles. Ford and Lincoln were the most improved brands in J.D. Power's 2025 U.S. Vehicle Dependability Study.

    03

    Ford Pro Performance and Growth

    Ford Pro demonstrated resilience despite planned downtime, maintaining segment leadership in North America with over 40% share of the Class 1-7 truck and van market and growing commercial brand leadership in Europe. Paid subscriptions increased 20% year-over-year to 675,000, with telematics up 80% and average revenue per unit (ARPU) growing 40%. The segment continues to invest in its physical service network, including 66 Ford Pro Elite centers and 4,600 mobile service units.

    04

    Model e and Ford Blue Updates

    Model e more than doubled Q1 wholesale volumes, driven by new launches like the electric Explorer, Capri, and Puma Gen-E in Europe. U.S. retail sales grew 15% due to the Ford Power Promise campaign, which provides a home charger and standard installation, achieving a 34% attach rate. Ford Blue achieved a modest profit, benefiting from disciplined revenue management and cost reductions, with hybrid mix of global sales increasing 250 basis points and iconic nameplates like F-Series and Bronco leading their segments.

    05

    Strategic Advantage of U.S. Footprint

    Ford highlights its significant U.S. manufacturing footprint as a major competitive advantage in the new tariff environment, having assembled over 300,000 more vehicles in the U.S. than its closest competitor last year, including 100% of its full-size trucks. The company has invested $50 billion in U.S. manufacturing capacity since 2020 and views its domestic production as a 'pole position' for value unlock.

    AI-generated summary of the company’s earnings call. Not investment advice.