Key Points:

• Ford hit a two-year low, struggling with poor management and EV failures.
• Persistent warranty costs highlight ongoing quality issues.
• The dividend is at risk; further cuts may follow. We’ll revisit after their next earnings report.’
• Also: If you want a dividend stock that wont leave you hanging and cut it’s dividend, check out two Dividend Legends To Buy and Hold Forever

Lee and Doug discuss the ongoing struggles of Ford (NYSE: F), highlighting its recent stock drop to a two-year low and the company’s poor management, particularly by the Ford family. They express skepticism about Ford’s future, especially given its failures in the EV market and persistent issues with warranty costs, which they attribute to poor quality management. They predict that Ford might eventually cut its dividend, which would impact the Ford family significantly, and criticize the company’s inability to focus on its core strength, the F-150 series. They joke about pre-recording a negative commentary on Ford’s upcoming quarterly earnings, confident that the results will likely be disappointing. They plan to revisit the topic after Ford announces its earnings.

Transcript:

Now, we love to talk about Ford.

Love it.

Awful company, awful management.

The Ford company, just God.

If you take a look at companies and you take a look at those who are run by families, Ford will go down in history as the worst.

Ford yesterday, when the market tanked, hit a two-year low.

Now, I understand the market sold off, but there weren’t a lot of companies that made two-year lows the day of the sell-off.

I mean, they’ve made six-month lows or something, but not two years.

I don’t see them pulling out of this.

I know we like to joke around and talk about the fact we don’t like the management, but I think they’re painted so far into a corner now with not being in the EV business and also…

I mean, every legacy manufacturer is getting killed in China, which used to be a great market for them.

So I don’t think there’s a Ford silver lining.

There probably isn’t.

And you can almost bet that with the kind of losses they’ve taken on the EV debacle, that dividend, which is, you know, in the four and a half percent range now, I think, haven’t looked in a while, maybe higher now since the stock went lower, they’re going to eliminate that dividend at some point.

And yeah, what they do will be very interesting and it will probably be cutting more divisions, which everybody else has done.

And I don’t know what they’re going to do.

Well, here’s an aside.

The people who make a lot of money on the dividend is the Ford family.

So if you talk about how painful it may be to cut a dividend, I’m sure that they’ll cry over the investors they have who aren’t Ford family members.

But if I’m the Fords, I’m going to say to myself, why do I have these Ford chuckleheads running this when we can go find somebody who’s like a second-tier manager from some mid-sized public company and bring them in and maybe we could hang on to our dividends?

But the thing that bothers me about Ford is a lot of people screwed up in EVs.

I mean, the government thought it was going to be a big deal.

Biden, I think he was well-intentioned when he said that the target was to have half the EV cars in the U.S. sold as EVs in 2035.

Certainly, GM and Ford said at the end of the decade that was going to be huge business for them.

The thing that kills me about Ford is that they’re still getting hit by warranty costs.

Yep, you’re right.

It’s very rare that somebody takes it on the chin every single quarter for warranty costs.

And warranty costs and recalls are a sign of only one thing, not 20.

It’s bad, bad quality management.

And you have to ask yourself, why does a major manufacturer, one of the largest manufacturers in the world, why can’t you get what is supposed to be your core competence right?

Well, the Ford Motor Company has made bad personnel decisions since they got rid of Lee Iacocca, the man who invented the Mustang, which literally saved Ford back in the 60s.

And yeah, I mean, as we’ve talked ad nauseam, they have the product.

They own the product that America loves in the F-150.

If you would just focus on your quality number one selling truck, number one for what, 45 years, 50 years almost, focus on that and forget all the other stuff, you’d be fine.

But they just never do it.

In the United States, 37% of Ford’s unit sales for all products are F-150s.

Or F-series, as they call them.

Right, exactly.

The monster things with 16 wheels on the back.

But most of them are F-150 pickups.

Well, let’s come back to Ford when they announce their quarter earnings.

I think that what we can do is record that now and talk about how horrible it is and just post it two days after earnings.

Yeah.

This is what we said in August.

We don’t even have to rerecord it.

We’ll pretend we know third-quarter earnings and just cut it now and send it in, and they can run it later.

Okay.

Sounds good.

All right.

Good.

Talk to you in a while.

Thank you so much.

Later.

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