Ford Motor Co’s 2017 financial performance will decline from this year’s results, because of increased spending on “emerging opportunities” like self-driving cars and other costs, said the No. 2 U.S.-based automaker.
Last week, Ford lowered its 2016 pretax profit forecast to $10.2 billion from at least $10.8 billion because of a charge in the third quarter for an expanded vehicle recall. Like most of its chief rivals, the company is seeking ways to profit as the industry moves toward self-driving vehicles and ride-sharing. However the automaker is taking a cautious path on this course.
Ford disclosed the financial outlook ahead of presentations later to Wall Street analysts in Dearborn, Michigan, where it is headquartered:
“We plan to achieve cost efficiencies averaging $3 billion annually between 2016 and 2018 and are adding new processes like zero-base budgeting to further our business transformation. This will offset the vast majority of costs being added to strengthen our business but will not be enough to offset higher regulatory and vehicle development costs for emerging opportunities, such as electric vehicles.”
The automaker has also added that automotive capital expenditures will rise to 5.6 percent of automotive revenue in 2018, from 4.9 percent in 2016 however they will decline after 2018.