Ford shares fall 6pc as supply snags and costs hurt profit forecast

Ford Motor shares fell 6 per cent on Tuesday after the automaker tempered its full-year profit forecast, blaming supplier disruptions and warranty costs amid a global price war fueled by overcapacity, reports Reuters.

It expects 2024 adjusted earnings before interest and taxes (EBIT) of about $10 billion, compared with its earlier projection of $10 billion to $12 billion.

In contrast, Detroit rival General Motors boosted its profit expectations last week.

Automakers are under pressure to discount vehicles as consumers feeling the pinch of high inflation increasingly opt for cheaper options.

The US auto industry is also expected to face further pricing pressures through the remainder of the year as significant US operational errors at Stellantis have left the company working to clear its bloated inventories.

"We remain cautious over concerns about a deflationary pricing cycle across the industry," RBC Capital Markets analyst Tom Narayan said in a note, adding that Ford's forecast cut was expected and the guidance is now "more realistic".

Though Ford reported third-quarter profit above estimates, its inventory was higher than its target range, as it ended the quarter with 91 days of gross stock and 68 days of dealer stock, CEO Jim Farley told analysts.