Ford raises 2020 profit outlook, eyes shift to build-to-order

DETROIT, July 28 (Reuters) – Ford Motor Co (F.N) on Wednesday boosted its 2021 profit forecast after reporting better-than-expected quarterly results, lifting the No. 2 U.S. automaker’s shares nearly 3%.

While an ongoing global chip shortage cost Ford market share in North America, Europe and China, higher prices on more profitable models such as large pickups and SUVs helped increase revenue and operating profit in North America, its largest market.

Ford Chief Executive Jim Farley said the automaker was intent on shifting away from making vehicles that wind up stockpiled on dealer lots, to building them to customer orders, reducing discounts required to make a sale.

“We are really committed to going to an order-based system and keeping inventories at 50 to 60 days’ supply,” Farley said.

Detroit automakers have aspired in the past to building vehicles to order and cutting inventories, only to allow inventories to build, requiring more incentives to move them out.

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Source: Reuters, Ben Klayman, Paul Lienert