Ford warns on profit for 2017, blaming increased spending on electric vehicles and driverless cars
Ford Motor said today that its profit in 2017 will decline from its result for this year, because it has ramped up spending.
The car manufacturer said it has increased spending on emerging opportunities and other costs – including electric vehicles and driverless cars.
Last week, the company lowered its 2016 pre-tax profit forecast to $10.2bn (£7.7bn) from at least $10.8bn because of a charge in the third quarter for an expanded vehicle recall.
Ford said it "plans to achieve cost efficiencies averaging $3bn annually between 2016 and 2018 and is adding new processes like zero-base budgeting to further its business transformation".
This will "offset the vast majority of costs being added to strengthen Ford's business," but will not be enough to offset higher regulatory and vehicle development costs for the emerging opportunities the company is planning to pursue.
Ford is expecting automotive capital expenditures to rise to 5.6 per cent of automotive revenue in 2018 from 4.9 per cent in 2016, but said this will decline after 2018.
Ford recently announced that its second quarter profit had missed expectations – it blamed stalling markets in the US and China.