DETROIT — This will be a year of belt- tightening for both General Motors and Ford Motor Co. as a potential recession looms, but the rival automakers are coming from very different places as they target billions of dollars in cost cuts, according to an Automotive News report.
GM achieved record earnings in 2022 of $14.5 billion before interest and taxes, and it posted nearly $10 billion in net income. Ford generated more revenue than GM but reported its second net loss in three years and fell more than $1 billion short of the earnings guidance it provided as recently as October.
Ford CEO Jim Farley blamed poor execution and “dysfunctionality” within the company he took over more than two years ago for leaving some $2 billion in profits on the table.
“We have deeply entrenched issues in our industrial system that have proven tough to root out,” Farley said on the company’s earnings call last week. “Candidly, the strength of our products and revenue has masked this dysfunctionality for a long time.”
GM executives said they plan to cut $2 billion in costs over the next two years, with 30 to 50 percent of that coming this year. The reductions, which will not include layoffs, are meant to help preserve margins as the automaker continues to ramp up its EV transition — including building more battery cells and launching key new models.
Ford, meanwhile, plans to slash expenses by a “considerable amount more than” the $3 billion it previously promised to cut by mid-decade, according to CFO John Lawler, who noted “everything is on the table,” including further layoffs.
Read the full Automotive News report.
Source: https://rvbusiness.com/automotive-news-time-for-pinching-pennies-at-ford-gm/
