Ford Motor is restructuring its leadership to address persistent quality issues and reduce industry-leading recall numbers and warranty costs.
The automaker announced plans to appoint a new head of quality, transitioning responsibilities from Jim Baumbick– who has led the team since late 2022. Baumbick will now oversee Ford’s vehicle programs, including electric and internal combustion engine vehicles, focusing on cost and timing. This organizational change will take effect early next year.
Key developments in leadership and strategy:
- New leadership in quality: A successor for Baumbick has not been announced, but the role will shift under a new leader to enhance accountability and focus.
- EV program realignment: Baumbick’s expanded responsibilities include integrating EV programs into Ford’s vehicle development, previously managed by Doug Field, a former Apple and Tesla executive.
- Quality as a priority: CEO Jim Farley, who took the helm in October 2020, has emphasized improving quality, reshaping production processes to catch errors early, and deploying additional resources to address safety concerns.
A record of recalls and challenges:
- Industry-leading recalls: Ford has led the industry in recalls since 2021, with 62 recalls in 2024 alone, second to Stellantis with 67 recalls, and ahead of General Motors with 33 recalls.
- Government penalties: In 2024, Ford agreed to pay up to $165 million in civil penalties after a federal investigation found delays in recalling vehicles with defective rearview cameras.
- Rising warranty costs: Warranty expenses surged by $800 million in Q2 2024 compared to the same period in 2023, largely due to issues with vehicles launched in 2021 or earlier.
Operational challenges and financial impact:
- Consent order compliance: Ford is under a three-year consent order with the National Highway Traffic Safety Administration (NHTSA), requiring a review of all recalls from the past three years and potential additional recalls.
- Stock performance: Ford’s shares are down 17% in 2024, reflecting challenges in quality and warranty costs, while Stellantis shares dropped 40% and General Motors gained 43%.
The road ahead:
Jim Farley has emphasized that “execution” will be critical in 2025 as the company works to deliver higher-quality vehicles while meeting the demands of electrification. Farley expressed optimism at a recent event, stating, “After three years of hard work fixing all of our deficits … we now have everything in place to really see our quality turn for our customers and for our business.”
