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Ford CEO Jim Farley can’t seem to get over this $5 billion problem

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

The US automotive staple has a relatively strong 2025, with sales expected to grow year over year; However, its operating profit has declined this 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 ended September 30, 2025 was $9.4 billion, a 4.55% year-over-year decline.

Declining EBITDA continues to be a concern for Ford, as it continues to decline from the reported $12.8 billion in 2021.

This year’s fees didn’t help. The company said it will incur more than $1 billion in tariff costs. Still, since Ford produces about 80% of the vehicles it sells domestically in the US, its tariff burden is significantly lower than that of its competitors.

While the tariffs are costly, they are not the biggest issue facing Ford.

After a record-breaking year, recalls are Ford’s costliest issue and could derail any of the company’s future growth plans.

Earlier this year, Ford earned a humiliating distinction after issuing 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.

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

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

Related: Ford adds to motor record it’s embarrassed to hold

Galhorta went on to say that most of its recalls “are associated with vehicles that were engineered many years ago before we changed all the robust processes in our industrial system.”

But the problem has only worsened.

According to the National Highway Traffic Administration, Ford has issued about 140 recalls so far this year, 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’s the toughest time yet.

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

On Friday, Ford added to its disgraceful record when it announced a recall of 272,645 vehicles in the United States because of damage to the park function that could cause the vehicle to roll away, increasing the risk of a crash.

The company said certain 2022-2026 F-150 Lightning BEVs, 2024-2026 Mustang Mach-Es, and 2025-2026 Maverick vehicles may not be able to lock into park position due to an integrated park module when the driver shifts there, NHSA said.

RELATED: Ford CEO Takes Subtle Shot After $20 Billion Hit at Tesla Cybertruck

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

This is at least the second Ford recall since December. Two weeks ago, NHTSA announced that Ford was recalling 108,762 vehicles due to improperly secured liftgate hinges that could detach.

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

Ford says the escape problem occurred during the assembly process when the hinge covers weren’t properly secured. Ford’s assembly process has come under scrutiny in the past, and the company says it is well on its way to fixing the problem.

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

“Improving quality is the biggest driver of closing our cost gap. Better quality
Reduces warranty costs and reduces recalls,” said Galhotra.

According to JD Power Warranty Analytics data, Ford says it is already making progress and is “on track” for best-in-class performance across six nameplates, with three other nameplates in the top quartile.

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

In 2023, Ford will spend $4.8 billion fixing customer vehicles, a 15% increase over the previous year. According to Warranty Week, he set aside $1,203 for warranty repairs on every car he sold that year.

A recent study by iSeeCars.com analyzing 31 years of recall history found that Ford is the least active car brand when it comes to issuing recalls. Less than 30% of cars in the last three decades are the result of a problem Ford discovered on its own.

To address this problem, in 2024, Ford launched a new quality assurance program that included “testing vehicles to failure” driven “at extremely high mileage” to find potential problems before customers.

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

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

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