Ford’s U.S. product sales slide 33% as chip scarcity devastates vehicle business

DETROIT – U.S. profits of Ford Motor’s new automobiles final month declined by 33.1% from a calendar year previously owing to an ongoing world wide shortage of semiconductor chips that’s wreaking havoc on the automotive industry, the corporation reported Thursday.

The Detroit automaker’s gross sales capped off a dismal thirty day period of U.S. vehicle gross sales in August, which plummeted to an adjusted selling charge of 13.09 million autos. Which is the worst tempo because June 2020 and down from this year’s peak of 18.5 million in April, according to vehicle knowledge organization Motor Intelligence.

Analysts expected the August promoting rate to be between 13.1 million and 14.4 million motor vehicles, with J.D. Energy and LMC Automotive forecasting overall income to drop by 13.7% when compared with August 2020.

The gross sales tempo for any offered thirty day period actions how many autos the market would provide for the calendar year if it sold the similar volume each individual month. It really is a primary barometer of the industry’s health and fitness and desire.

August is traditionally 1 of the increased vehicle product sales months of the 12 months, but the chip shortage has induced auto stock concentrations to plummet to file lows and pricing of new autos and vans to skyrocket.

The Ford organization symbol is exhibited on a indication exterior of the Chicago Assembly Plant on February 03, 2021 in Chicago, Illinois.

Scott Olson | Getty Illustrations or photos

Sellers only have about 942,000 cars in stock for retail sale, as opposed with approximately 3 million prior to the coronavirus pandemic two several years ago, according to Thomas King, president of the facts and analytics division at J.D. Power.

“Even though inventory is arriving at sellers day by day, it is only replacing the motor vehicles remaining offered, preventing dealers from raising inventories to a amount required to help a higher profits tempo,” King explained.

Even though most big U.S. automakers have switched to quarterly profits reporting, several others that continue to report month-to-month profits these as Honda and Subaru also noted double-digit losses in August. Toyota, Volvo, Hyundai and Kia reported slight revenue boosts or losses compared with a year in the past.

Sales of almost each automobile in Ford’s lineup ended up down last month when compared with final 12 months, with incremental sales gains from some new autos such as its Bronco SUVs. Most notably, Ford’s bestselling F-Sequence pickups declined by 22.5%.

Ford’s whole income previous month topped 124,176 cars. Truck income had been down by practically 30%, when SUVs were being off by 25.3% and automobile revenue fell by 86% from August 2020.

A silver lining for Ford past thirty day period was that its retail profits were up by 6.5% compared with July but still off by 33% from August 2020, in accordance to Andrew Frick, vice president, Ford Sales U.S. and Canada.

Ford’s profits come a working day soon after the automaker verified it was once yet again chopping creation of its F-150 pickup truck and other hugely successful motor vehicles due to the ongoing international lack of semiconductor chips.

The origin of the shortage dates to early very last yr when Covid triggered rolling shutdowns of car or truck assembly crops. As the facilities closed, the wafer and chip suppliers diverted the elements to other sectors these types of as customer electronics, which weren’t expected to be as harm by continue to be-at-residence orders.

The difficulty is anticipated to price the world wide automotive business $110 billion in profits in 2021, according to consulting business AlixPartners.