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Ford And GM Walking Tight Rope To Balance High Prices And Supply Chain Pressure


10/28/2021


Ford And GM Walking Tight Rope To Balance High Prices And Supply Chain Pressure
In order to compensate for the pain inflicted by supply chain bottlenecks, Detroit automakers Ford Motor Co and General Motors Co taking benefited from the voracious appetite and demand for trucks and SUVs from American consumers.
 
However, the production disruptions caused by the shortage of semiconductor supply globally as well as the rise in prices of other commodities will last far into next year, both the automakers warned their investors.
 
That would mean maintaining a delicate last far into next year for the Detroit automakers: raising the price for consumers of their popular vehicles such as the Ford F-150 and Cadillac Escalade while also trying hard to normalize the flow of supply of semiconductors as well as keeping down the costs of raw materials, such as steel, aluminum, and magnesium, to manageable levels control.
 
A significant question is how much higher prices can go.
 
During the third quarter, the typical GM vehicle was sold for more than $47,000. The price of its vehicles sold in North America was increased by Ford by over $3,500 on average. During the latest completed quarter, the higher prices helped in offsetting the higher raw material expenses, both the companies said.
 
Indications that the companies would find handling the chain pressures will be difficult was made in the earnings reports published by both Ford and GM on Wednesday. The quarterly results also suggested that a keen eye on the businesses is being kept by investors.
 
 
The electric vehicle maker Tesla Inc now overshadows both the companies – which were once dominant in the automobile market, as Tesla reported stronger than expected profit margins last week and achieved a market capitalization of $1 trillion earlier this week which made it a more valuable auto company than its top five rival automakers combined.
 
Executives from both GM and Ford have touted their ambitions to challenge the dominance of Tesla in the EV market even though the companies still critically depend almost entirely on profits generated from petroleum-fueled trucks for now.
 
According to a recent comment by GM Chief Executive Mary Barra, it was “absolutely” possible for the company to catch up to Tesla in the US in terms of sales of EVs by 2025. Investments of $30 billion in battery electric vehicle development from 2020-2025 have been announced by Ford.
 
Ford possesses orders for 160,000 electric F-150 Lightning pickup trucks, company CEO Jim Farley announced recently and added that it had "totally sold out" its electric Transit commercial van.
 
While projecting higher earnings for the entire year, Ford also reported a better-than-expected third-quarter profit. The company’s forecast was based on expected continued strength in demand for its trucks which it hopes will be enough to help the company to cushion the impact of the global chip shortage.
 
On the other hand, a warning from Ford to investors said that it could be hit by $1.5 billion next year because of increasing steel and aluminum prices, while also saying that in 2022, "inflationary pressure will impact a broad range of costs."
 
(Source:www.londonnewstime.com