Ford CEO warns of the dangerous formula Americans are using to buy cars due to tariffs: “you can’t rely on previous forecasts”
Ford is suspending its annual financial guidance due to uncertainty surrounding tariffs introduced under Donald Trump’s administration.
After coming out in support of the new tariffs put into place under President Donald Trump’s administration, Ford has now suspended its annual financial guide to to the uncertainty tariffs have caused.
2/ Ford CEO Jim Farley just went on Fox Business. He's ALL IN on Trump's tariff policies. Says Ford is "perfectly positioned" to WIN BIG in this new era.
— Rod D. Martin (@RodDMartin) April 30, 2025
"We think [Trump's policies are] really great for the country. We support the president's initiative." pic.twitter.com/7l5HwZUdo2
While they support the broader goal of “strengthening the U.S. economy by growing manufacturing”, Ford estimates that the tariffs will cost the company around $1.5 billion in EBITDA for the year 2025. They had originally projected EBITDA between $7 billion and $8.5 billion.
Jim Farley warns Americans about unsustainable formula
It’s not only Ford showing concern about the tariffs. Key competitor General Motors has also suspended its guidance as well as halted a $4 billion buyback program, citing similar concerns.
“Because the original guidance didn’t include the impact from tariffs, prior guidance can’t be relied upon,” said Paul Jacobson, GM’s chief financial officer.
Despite a 65% drop in Q1 profits (caused partially by new vehicle launch disruptions), Ford remains cautiously optimistic that the demand for new cars will persist as long as the economy holds steady.
What’s happening now is that consumers are increasingly relying on financing, with over 80% of new buyers using loans, while 84-month loans are becoming more and more common. CEO Jim Farley is indirectly warning Americans about the unstable nature of these longer-term auto loans.
The reason buyers are stretching their loans to 72 or 84 months (six to seven years) is to keep the monthly payments manageable. However, this masks the true cost of the vehicle. While it seems more affordable on a monthly basis, it keeps buyers in debt longer, paying more in interest. This strategy may not be sustainable if interest rates increase or the economy weakens in the second half of the year.
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