1st-quarter profit down for Ford; way down for GM
Ford Motor Company's first quarter 2014 profit fell 39% from the same period last year due to a combination of factors, including currency problems in Venezuela, and higher costs for warranty claims and recalls.
Ford made $989 million net income in the first three months of the year.
Ford Chief Financial Officer Bob Shanks says some of the decline was foreseen.
The automaker is launching more vehicles (23) this year than any time in its history.
"With the launches, of course, you have plants that have to come down a bit," says Shanks. "And then they come back up, when the new product launches, and there's a launch curve, and we do expect to have lower volume over the course of the year, and we did in the first quarter."
Shanks says Ford also paid $400 million to cover the cost of actual recalls and expected recalls and warranty claims.
"Obviously we don't like recalling vehicles, having to recall vehicles, but you have to do what's right for the customers," says Shanks. "We just have a very strict disciplined process around them, so when the data says that we need to do something, we do something."
Ford also took a charge on its first-quarter books of $400 million, to account for Venezuela's weak currency.
That's the same amount disclosed by General Motors.
GM reported a razor-thin profit of $100 million yesterday.
In addition to the currency loss, the company paid $1.3 billion to recall seven million vehicles worldwide, including 2.6 million with a defective ignition switch.
The faulty switch has garnered GM non-stop, highly unfavorable headlines and Congressional attention, because of a 10-year delay in issuing the recall.
GM officials say the recall scandal has not significantly hurt its sales.