Ford said yesterday that its second quarter losses would more than double to over US$5 billion (RM21.8 billion), from US$2 billion in Q1 due to the impact of the Covid-19 pandemic. However, the Dearborn, Michigan-based carmaker said it had enough money to last the rest of 2020.
“We believe the company’s cash is sufficient to take us through the end of the year, even with no additional vehicle wholesales or financing actions,” CFO Tim Stone said in a statement. However, the current economic environment is “too ambiguous” for Ford to give a full-year 2020 earnings forecast, he added.
According to Reuters, Ford has slashed costs during the coronavirus outbreak to weather the forced shutdown, including pay cuts for executives and white-collar staff.
The maker of the Mustang also cut spending on projects, saying yesterday that it was pushing back its commercial autonomous vehicle services by a year to 2022, and that it had decided not to proceed with a previously announced luxury electric Lincoln SUV in partnership with EV-maker Rivian, which Ford has invested in.
Ford has been upfront with its financial position. It pre-announced the Q1 loss earlier this month, and that warning came the same day the Blue Oval raised US$8 billion from corporate debt investors. Last month, Ford moved to bolster its reserves, drawing down US$15.4 billion from two credit lines and suspending dividends.
Ford previously said it expected to spend US$700 million to US$1.2 billion on its global restructuring this year, but executives said the company is now looking at additional actions.
After virtually all car production in the US ground to a halt in March because of Covid-19, several states are beginning to reopen their economies and president Donald Trump has been pushing for Americans to get back to work. In an earlier conference call, Stone said Ford would restart US production “as soon as practicable”, with no timeline given.
Ford and its US peers GM and Fiat Chrysler are aiming to resume production sometime in May. All are currently negotiating with the United Auto Workers (UAW) union, which represents their US hourly workers, about how to safely reopen factories. Last week, the UAW said it was “too soon and too risky” to restart in early May. Ford, which is now making medical gear, was previously pushing for an April restart at plants that made its most profitable vehicles.
The challenge to reopen is easier elsewhere – Ford said on Tuesday it would restart most of its European factories from next Monday, and has already resumed operations in China, where sales fell 35% in Q1. US sales fell 12.5% in the first quarter. Once North American plants are rolling out the cars again, the issue for carmakers will be how fast demand for new autos bounces back.
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