Warranties can save your rear from expensive repairs. However, Ford warranty costs are creating significant losses for the automaker. Fixing trucks, cars, and SUVs, is costing Ford Motor Company billions. 

Ford warranty costs are decimating profits 

Because Ford warranty costs are stacking up at a rapid rate, the automaker is losing billions. Ford had to lower its full-year earnings guidance. 

Its profit has tumbled by about 26% and there’s still time left in the year to lose even more. While Ford did make $892 million from July through September, it made $1.2 billion during the same time period in 2023. 

The Ford full-year pretax income guide has been reduced from $12 billion to the low end of $10 billion it expected at the end of the second quarter. 

Ford CEO, Jim Farley shared that costs, especially related to warranties, have held back earning power. The company has faced about $800 million in increased warranty costs during the second quarter of the year. 

But the automaker has been working to reduce warranty costs for the past four years. While working to reduce Ford warranty costs, it tried to cut quality-related repairs after glitch-prone small car transmissions hurt the bottom line. 

While Ford managed to reduce $2 billion in material, freight, and labor costs in 2023. But the savings were offset by warranties and inflation. 

Some popular models like the Ford F-150 have been held in production to address quality issues before the trucks were delivered to customers. 

However, popular models like the F-150 have still been plagued by a high number of recalls and other issues that need to be repaired under warranties. For example, Ford issued 25 recalls during the first 19 weeks of 2024. 

Even minor issues such as failure windshield adhesive have snowballed into issues that are frustratingly expensive and time-consuming. 

Perhaps more focus should be placed on quality than cutting costs of materials, labor, and more.