Ford CEO Jim Farley can't seem to outrun this $5 billion problem

Ford CEO Jim Farley can't seem to outrun this $5 billion problem

Tony Owusu

Sat, December 20, 2025 at 10:37 AM EST

5 min read

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Maybe Ford is just getting it all out of its system before the calendar flips to January.

The U.S. automotive staple has had a relatively strong 2025, with sales expected to increase year over year; however, its operating profit has taken a hit this year.

Ford’s total U.S. sales by year:

2024: 2.08 million vehicles sold, +4.2%
2023: 1.99 million vehicles sold, +7.1%
2022: 1.77 million vehicles sold, -2.2%
2021: 1.9 million vehicles sold, -6.8% Source: Best-Selling Cars

Ford Motor's EBITDA for the 12 months ending September 30, 2025, was $9.4 billion, a 4.55% year-over-year decline.

Falling EBITDA has been a persistent concern for Ford, as it has steadily declined from the $12.8 billion reported in 2021.

Tariffs this year didn't help. The company stated that it would incur over $1 billion in tariff expenses. Still, since Ford manufactures about 80% of the vehicles it sells in the U.S. domestically, its tariff burden is significantly lower than that of its competitors.

While tariffs are costly, they are not the biggest issue Ford faces going forward.

After a record-breaking year, recalls are the issue that is costing Ford the most and could derail any of the company's future growth plans.

Ford blows away GM's recall record

Earlier this year, Ford earned an ignominious distinction after it issued its 89th recall of the year before July. The Blue Oval shattered the record set by General Motors in 2014, when it issued 77 recalls that year.

“We are not satisfied with the current level of recalls or the number of vehicles impacted. We are working to reduce the cost of these recalls,” said Chief Operating Officer Kuman Galhorta during the company's second quarter earnings call.

November Ford sales by brand

Ford F-150 Lightning: 1,006 (-72%)
Ford Mustang Mach-E: 3,014 (-49%)
Ford SUVs: 55,888 (-3.7%)
Ford Bronco: 11,045 (+7%) Source: Ford

Galhorta went on to say that the majority of its recalls are “tied to vehicles engineered several years ago before we made all the robust process changes across our industrial system.”

But the issue has only worsened.

Ford has issued nearly 140 recalls so far this year, according to the National Highway Traffic Administration, meaning the company is on track to more than double GM's record.

While Ford isn’t the only original equipment manufacturer struggling with recalls in 2025, it is by far having the toughest time.

Ford has accounted for 35% of U.S. auto recalls this year, according to the National Highway Traffic Administration. Stellantis, in second place for the number of recalls, only accounted for 12%.

Story Continues

Ford recalls nearly 300,000 vehicles over parking issue that could cause accidents

On Friday, Ford added to its ignominious record when it announced a recall of 272,645 vehicles in the U.S. due to a loss of park function that could cause the vehicle to roll away, increasing the risk of a crash.

The company is recalling certain 2022-2026 F-150 Lightning BEVs, 2024-2026 Mustang Mach-Es, and 2025-2026 Maverick vehicles due to the integrated park module potentially failing to lock into the park position when the driver shifts it there, the NHTSA said.

However, this is one of the recalls that can be fixed with a software update, so the park module software will be updated over-the-air or by dealers free of charge.

This is at least the second Ford recall from December. Two weeks ago, the NHTSA announced a Ford recall of 108,762 vehicles due to an improperly secured liftgate hinge that could detach.

That recall covered certain 2020-2022 Escape and 2025 Escape models. Separately, Lincoln, Ford’s luxury arm, also recalled nearly 12,000 Lincoln MKT vehicles due to a driver and front passenger door trim that could detach, increasing the risk of a crash.

Ford says the Escape issue occurred during the assembly process when the hinge covers were not properly secured. Ford's assembly process has come under scrutiny in the past, and the company says it is well on the way to fixing the issue.

Ford says it’s fixing recall and quality issues

Ford is aware of its quality-control issues, and CFO Kumar Galhotra addressed the issue during his comments on the company’s third-quarter earnings call.

“Improving quality is the single biggest driver to close our cost gap. Better qualitylowers warranty expense and reduces recalls,” Galhotra said.

Ford says it is already making progress and is “on track” for best-in-class performance across six of its nameplates, with three other nameplates in the top quartile, according to J.D. Power warranty analytics data.

The company also reported lower year-over-year third-quarter warranty costs, down $450 million.

In 2023, Ford spent $4.8 billion fixing customer vehicles, a 15% increase from the previous year. It set aside $1,203 for warranty repairs on each car it sold that year, according to Warranty Week.

A recent study by iSeeCars.com, analyzing 31 years of recall history, found that Ford is the least proactive car brand when it comes to issuing recalls. Fewer than 30% of the cars recalled over the last three decades resulted from a problem Ford found on its own.

To remedy this problem, in 2024, Ford initiated a new quality assurance program that incorporates “testing vehicles to failure,” running them “at extremely high mileage” to find potential problems before customers do.

At the time, CEO Jim Farley said the new approach would “reduce warranty (costs) over time.”

This story was originally published by TheStreet on Dec 20, 2025, where it first appeared in the Automotive section. Add TheStreet as a Preferred Source by clicking here.

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