Ford is reaching a milestone in quality, aiming to launch flawless new cars

DETROIT – Ford Motor constantly promotes itself as the foundation of American manufacturing, business leadership and trucks with the best-selling F-Series pickups, but it also leads the US in one area it is not proud of: vehicle recalls and quality problems.

They have plagued the Detroit automaker’s earnings, undermined customer loyalty and tarnished Ford’s reputation for much of the past decade. The automaker has issued 53 auto recalls for more than 12 million vehicles so far this year after an industry record 153 recalls covering 13 million cars and trucks by 2025.

But that era for Ford is coming to an end, CEO Jim Farley told CNBC during an exclusive interview, as the automaker sees an important quality milestone. He said that Ford has learned from its past mistakes and will use that knowledge to try to flawlessly introduce a range of new products in the coming years.

“Our best days are ahead of us as we continue to make this quality transition for our investors, for our employees, for our customers,” Farley said during a phone interview. “We’re going to have all new cars in our entire North American lineup in a few years, and for that new lineup, we have to launch all of those well.”

Doing so will be a difficult task. The launch of new vehicles, especially those with emerging technologies such as software-defined systems and electric powertrains, is complex, and one problem can have a negative impact on the entire product line.

It’s something Farley knows all too well. Such problems have cost Ford billions of dollars in less than six years at the helm of the company.

The automaker this week added to its 2026 recall total by recalling 741,195 SUVs and F-150 trucks ranging in age from the 2018 to 2021 model year.

Investors have been eyeing the issues, saying unnecessary warranty costs are a threat to the company’s direction and future business plans. Warranty costs are the costs that a car manufacturer incurs to pay for repairs, replacements and other costs for defective parts or work performed under a certain period of time or miles driven after customers purchase a new car.

Ford said it has reduced warranty and material costs by $1.5 billion by 2025, when adjusted for volume and mix, and targets further reductions in warranty and material costs by 2026. This follows the company’s warranty costs reaching $4.8 billion by 2023.

“Although warranty costs have been a drag on revenue for the past few years, Ford appears to have ‘turned around,'” Barclays analyst Dan Levy said in a May 15 investor note, citing four consecutive quarters of year-over-year warranty gains. “We believe the 1Q warranty improvement is encouraging, but we believe further improvement is still needed.”

Last week the company received external validation of its years of efforts to fix product problems as the Ford brand was named the leading brand in the US mass market in JD Power’s first quality ranking.

After the news was released on June 25, Ford stock rose 2%, making it the second best trading day of the month.

It’s the first time since 2010 that Ford has led mainstream brands in the impact study, which assesses expected new vehicle quality based on problems reported by owners in the first 90 days of ownership. Ford, ranked number 23 in 2023, ranks third among all brands, behind luxury automakers Porsche and Hyundai’s Genesis. It came ahead of Toyota’s Lexus at number 4.

Ford has improved in almost every category of vehicle rated by JD Power for premium quality, including software, infotainment and powertrains.

This admission comes as Farley has redoubled efforts to restructure Ford’s leadership, including their bonuses and allowances; focus on quality; and revise its processes and those of suppliers and other partners to identify potential problems.

“I’m very proud that an American car company can beat the world with high quality, but it’s clear that none of us are satisfied,” said Farley, who worked at Toyota for nearly 19 years before Ford. “We have a lot to do to become the No. 1 quality brand in every aspect.”

Farley said Ford needs to continue to try to lower its warranty and recall costs and improve its overall quality reputation, including long-term durability.

Ford and its Lincoln luxury brand ranked 18th and 19th respectively in JD Power’s US Vehicle Dependability survey released in February, well below the industry average. That study looks at cars over a long period of time.

Farley refused to predict that Ford, which led to his being sent back to the US from 2024, will no longer have that position, saying that he will not be able to control what happens to old cars and the efforts of competitors in quality. But he said the company’s actions will “result in a significant reduction” in future recalls of current and future products.

“The biggest success metric is what we’re going to do within five or 10 years of launching, through every economic cycle,” he said. “Everyone wants a quick response, but when it comes to quality, time is the most important measure of success.”

Recalls are companies that fix defects that were not caught or known during the development or production of the vehicle. They can range from simple problems like visor labels or software updates to more severe problems, which can be dangerous for consumers.

Ford’s recent quality efforts have focused on finding any problems as early as possible in vehicle development, which Farley says means restructuring the company’s processes structurally.

He implemented a new organizational structure and has employed 350 technical experts since 2023, held regular meetings, encouraged close cooperation with suppliers and carried out rigorous testing during the entire vehicle development process.

Ford also changed its bonus structure, tying top compensation more closely to quality metrics, including those from new managers. The Whirlpool again Johnson Controls who brought more quality expertise.

Ford still has to deal with problems along the way. After it introduced new artificial intelligence tools to diagnose problems, the company eventually had to bring back what it calls “gray” engineers to help guide younger workers and better train its AI models.

“We found out earlier that Ford is reorganizing the company to save money, and we found out that we have let go of people with experience in purchasing, production and engineering,” he said. “By bringing those people back, that goes hand in hand with all these AI technologies.”

In many companies, AI is increasingly showing that it can increase productivity for many tasks but may not be effective if it is not properly trained and deployed to assist the work of human employees.

Farley said that while Ford’s quality efforts are a never-ending journey, he believes the company is in the midst of its latest transformation efforts under his Ford+ business plan, which is beginning to reflect Ford’s future.

“I know after 40 years how important quality and durability are, and how difficult it is to be the best, which is just the beginning,” said Farley. “We will not lose this momentum, it should be a tradition.”