Ford has a costly problem.
The company has led the auto industry in recalls for years. In 2022, the company recalled more than 8.6 million cars to fix 67 known defects. In 2023, after a significant quality push, it cut that figure to 5.9 million and 55 defects. It’s better, but it is still an embarrassing industry lead.
Bloomberg reports that recall repairs cost Ford $4.8 billion last year.
So, the company has a radical new plan: It will delay delivering many newly redesigned cars for six additional weeks of quality checks.
CEO Jim Farley told investors on an earnings call, “Our earnings may be a little lumpy,” but he expects “fewer recalls and lower warranty costs because of this new process.”
Dealers will see new models arrive later than they’re accustomed to, but shoppers will not notice much difference.
And Ford says the delay works. In early 2024, Ford held 60,000 F-150s in parking lots around Detroit so that engineers could perform additional quality checks. The move caused a temporary decline in earnings. But, Bloomberg reports, “the extra quality checks also allowed the automaker to avoid 12 recalls.”
Ford briefly flooded dealerships with trucks when it released the backlog for sale. With current market conditions, the influx was hardly noticeable. Most brands have too much inventory on dealer lots right now, triggering discount offers that drive prices down.
So, Ford plans to build in a similar delay with many newly redesigned models.
“Now, Farley is holding another marquee model, a redesigned version of the Explorer sport-utility vehicle, for extra tests. He plans a similar approach later this year with updated editions of the Bronco Sport compact SUV and hot-selling Maverick small pickup,” Bloomberg says.
