At the moment, it’s unclear what automakers will be dealing with in terms of potential tariffs being imposed on goods and vehicles from a variety of countries, as the Trump administration is still in the process of hammering out new trade deals with many of them. As such, Ford opted to suspend its full-year guidance back in May, at least, until this picture becomes a bit clearer. Now, Ford is using a familiar financial tactic to boost its liquidity, too.
According to CBT News, Ford has secured a $3 billion term loan credit agreement that’s being administered by JP Morgan Chase, but is otherwise divided between multiple lenders. The automaker stated that it made this move proactively as it works to give itself some financial flexibility and increase liquidity, which is key during these times of economic uncertainties. It would also help The Blue Oval better navigate a potential downturn in regard to demand for its products, which could happen if tariffs result in price increases over the coming months.
Such a move is nothing new, of course, as we just saw Ford take out an additional $4 billion dollar line of credit back in August 2023. At the time – when Ford was dealing with uncertain demand for EVs and negotiations pertaining to a new UAW contract – it noted that this gave the company “additional working capital flexibility on top of our already strong liquidity position to manage through a variety of uncertainties in the present environment. Especially over the last several years, we’ve been deliberate in maintaining a strong cash and total liquidity position so we can run the business as it is today and invest in the business that we envision.”
In the meantime, Ford is taking broad measures to reduce the impact of tariffs, including stocking up on parts that comply with the current U.S.-Mexico-Canada Agreement and renegotiating contracts with suppliers. Regardless, the automaker expects tariffs to result in “marginal” price increases in the second half of 2025.
Comments
Good idea. With the economy on the brink and the Ford lineup ever-shrinking…as long as they don’t go blowing it on more EVs and EV-related plants. And there’ll be all that debt service also to consider.
I guess losing $1B+ year-after-year on EVs wasn’t such a good idea after all. Ford could use that cash now.
3 billion should just about cover 6 months of warranty claims
With the economy strong and filings for unemployment at the same levels 1 year ago, they should weather this out easily. Sales are up in 2025, the next few months are usually slow with vacations and students going back to school. Stock market is strong and plenty of wealth being created there. New tax laws will help next year when people file and put more money back in their pockets.