Ford CEO Jim Farley said on CNBC Wednesday that he expects the chip shortage impact on business to get worse before it improves, but the automaker will be set up for a strong 2022.
“Second quarter is going to be the trough for us,” he told Jim Cramer in a “Mad Money” interview. “We think this quarter is going to be our most difficult.”
Farley, who began leading the Dearborn, Michigan-based company in October, is counting on the landscape to brighten later this year.
“We do count on a rebound in our production in the second half,” he said, adding that 2022 “is going to be an incredible year for us.”
The comments come after Ford reported numbers from the first quarter at the end of the trading day. The company beat Wall Street’s estimates on the top and bottom lines.
Ford said it expects the global shortage of semiconductors, which hit manufacturing across various industries, to have about a $2.5 billion effect on the fiscal year. The parts problem impacted about 17%, or 200,000 units, in the first quarter, Farley said. In a press release, Ford said it expects to lose about 1.1 million units of production this year due to the shortage.
“In the first quarter, we offset all of those production cuts in terms of incremental pricing and cost control and we did not mortgage the future to do that. We actually accelerated spending on EV,” he said.
Farley said that the shortage could extend into the second half of 2021, but the company is in a position to weather the pain.
Shares of Ford closed 0.48% lower on Wednesday at $12.43. The stock was down about 3% in after-hours trading.