AUTO

Ford says ‘no negative impact’ to dealers from chip shortage

DETROIT — Ford Motor Co. told dealers this week that it would not lower their product allocations in response to a shortage of microchips used in vehicles and that there would be “no negative impact” to their retail business.

Andrew Frick, Ford’s vice president of sales in the U.S. and Canada, said in a letter obtained by Automotive News that the automaker has faced a “very challenging” few months because of the chip shortage and recent severe winter weather that has resulted in multiple production disruptions for some of its most profitable vehicles. Frick said Ford expects the shortage to continue until at least midyear.

“The impact has been particularly significant on selected product lines, primarily F-150, Escape, Edge and EcoSport,” he wrote. “While these vehicle lines represent most of our chip-related losses, there have been minor disruption on other lines.”

Despite the unexpected downtime at plants around the globe, Frick said Ford planned “to fulfill our mutual wholesale commitments as we work through the near-term interruptions.”

Still, Frick told retailers their overall volumes for April and May will be lower. He said they should be “encouraged by the significantly larger forecasted production outlook for next month,” though he did not provide a figure.

Ford officials have said they expect the chip shortage to potentially reduce first-quarter global production between 10 and 20 percent.

CFO John Lawler last month said the shortage could lower Ford’s 2021 adjusted earnings by $1 billion to $2.5 billion, adding that Ford would provide a more detailed look on how the shortfall will affect earnings when it reports first-quarter results in April.

Frick remained optimistic that the company could recover in the second half of the year.

“Collectively we have learned to turn our inventory more quickly to meet customer demand,” he said. “We have incentives in place for retail orders and have significantly increased our retail volumes as a result.”

The website Ford Authority reported details of the letter earlier Friday.

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