The News
Ford expects higher commodity costs to take nearly $2.5 billion out of its 2026 results, up from just above $2 billion three months ago, its third-quarter 10-Q shows. Higher fuel prices “are impacting our freight and energy costs,” CFO Sherry House said.
Ford said it continues “to see increasing pressure from input costs.” In February, its 10-K counted about $1 billion of higher commodity prices for the year.
“We currently expect commodities, memory and logistics costs to represent a year-over-year headwind of about $2 billion at Ford,” CEO Jim Farley said of 2027.
The details
Aluminum drove the first jump. In April, Ford doubled its estimate to just above $2 billion, “largely due to higher aluminum pricing driven by global supply constraints.” The October filing names no single metal.
Global aluminum averaged $3,283 a ton in September, 34% more than two years earlier. Copper rose 56% over the same stretch and US hot-rolled steel sheet 21%.
Ford Pro’s third-quarter EBIT fell $320 million to about $1.7 billion on higher costs, led by commodity prices, the Super Duty launch in Oakville, Ontario, and temporary aluminum sourcing.
Diesel has risen faster than any of the metals. Ford’s freight and energy bills rise with it, though demand for its trucks and fleet vehicles has held so far.
Ford assumes US industry pricing rises about 1% this year, up from 0.5% in July.
Two supplier failures have hit Ford’s truck output this year. The first was the fires at aluminum supplier Novelis. The second stopped F-150 production for nearly a week at the end of September. Ford has not named the supplier.
Ford canceled all production crews at Dearborn Truck Plant for nearly a week and cut some shifts at Kansas City Assembly. Ford called it “a short-term supplier issue unrelated to aluminum” in an 8-K and said the cost is “containable” within its guidance.
“At Novelis, operationally, the recovery is largely behind us,” House said. Ford has spent about $1 billion on temporary Novelis costs this year and still expects a net $1 billion improvement from the recovery.
Ford is running its trucks on far less dealer stock than it used to. It ended the quarter slightly below its target of 55 to 65 retail days’ supply, with F-150 at 49 days.
“A normal stocking level for F-150 could have been 80 to 100 days supply in the past,” Farley said. “Our target is that 50, low 60-day supply.”
Gross stock rose about 6% from the second quarter. Ford expects stocks back inside the target range by year-end.
“We just came out of the third quarter where we had the fastest turn rates of the year,” said Andrew Frick, president of Ford Blue and Model e.
My notes
Lean truck stock leaves less room for the next supplier stop. At 49 days, F-150 dealer stock is about half of what Ford used to carry. A week without production comes straight out of that buffer, and Farley says dealers already want more trucks.
Who pays for the 2027 bill? Ford expects about $2 billion more in commodity, memory and logistics costs next year and plans to offset it. House listed revenue optimization, software and parts growth, and savings as the levers Ford controls. I’d like to know how much of those savings runs through supplier contracts.
What’s next
Ford expects dealer stocks back in its target range by year-end. Prototype builds of the next F-150 start in the first quarter of 2027, and retooling its plants will take planned production downtime next year.
Photo: 42-BRT / Wikimedia Commons (CC BY 4.0)
