Ford Plans More Price Hikes As It Sees $4B Commodity Headwinds This Year

Ford Motor Co F CFO John Lawler said on Wednesday it now expects commodity headwinds to double to $4 billion this year and will rely on further price hikes to offset those increases.

What Happened: Dearborn, Michigan-based Ford had previously estimated headwinds of between $1.5 billion to $2 billion. 

Lawler said Ford expects inflationary pressures to continue the rest of the year and will ramp up “cost reduction” efforts.

“We expect commodity headwinds of about $4 billion, which we expect to be offset by improvements in net pricing and mix,” Lawler told analysts on a post-earnings call.

“If commodities keep going up, we'll be as aggressive as we can.”

See Also: Ford Q1 Earnings Highlights: Revenue And EPS Beat, Valuation Of Rivian Stake Down Sharply, Electric Vehicle Forecast And More

Lawler said many dealers are transacting near or above MSRP across the industry and expect that to come down first on the pricing front.

Ford CEO Jim Farley had in the same call said the legacy automaker is seeing significant pricing pressure on the commodity side with respect to steel, aluminum, copper, lithium, and nickel.

Why It Matters: Ford’s comment comes a day after legacy rival General Motors Co GM complained of inflationary pressures as well. The legacy automakers have been juggling commodity price hikes, supply chain issues that continue to bite the industry since the start of the pandemic.

Tesla Inc TSLA CEO Elon Musk had earlier this month said recent price hikes were responsible for “quite a bit for cost growth.” The electric vehicle maker was the first to announce a series of significant price hikes.

Price Action: Ford shares closed 0.9% higher at $14.85 on Wednesday and were 2.09% up in after-hours trading.

Read Next: Ford CEO Jim Farley Seeks 'Smart Deals' With Mining Industry Amid Soaring Metal Prices

 

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