Ford reported a stronger-than-expected first quarter but predicts a weaker-than-expected second quarter. The Dearborn-based automaker said an ongoing microchip shortage is responsible for its move to produce half the cars it had planned to build from April to June.
The company reported a net income of $3.3 billion between January and March – a dramatic change from the net loss of the first quarter of 2020 amid the coronavirus pandemic.
But the big news is the semiconductor shortage. Ford said it built 17% fewer cars than planned in the first quarter due to the worldwide shortfall in microchips. But it expects that situation to get much worse – the company may halve production in the second quarter.
The decrease, Ford said, is mostly due to a fire at Japanese chip supplier Renesas in March. Before the blaze, the automotive industry was already suffering the effects of a shortage caused by factory closures during the COVID-19 pandemic. A worldwide buying spree on computers and other electronics is using up much of the available chip supply.
The shortage has halted or reduced the production of some of Ford’s most profitable products. The company recently temporarily shuttered some, but not all, production lines building its best-selling F-150 pickup.
Ford CFO John Lawler said the company expects to build about 1.1 million fewer vehicles in 2021 due to the shortage. The company sold about 4.2 million cars worldwide last year.
During a quarterly earnings call, CEO Jim Farley told investors, “There are more whitewater moments ahead for us that we have to navigate. The semiconductor shortage and the impact to production will get worse before it gets better.”
CFO Lawler said he expects the problem to peak in the second quarter.
