Jim Farley is a “car guy”. That is how Ford’s executive chairman Bill Ford described the man who was this week named as new chief executive of the US car giant.
Mr Farley will need all his knowledge and love of cars to turn round the Detroit auto manufacturer, which struggled with flagging profitability, a falling share price and high debt during Jim Hackett’s three-year reign.
This time, the carmaker has chosen an insider, who owns and races vintage cars, for the top job after alternating between company veterans and industry outsiders for the past decade.
The grandson of a Ford employee, who became heir apparent in February when he was promoted to chief operating officer, is a contrast to Mr Hackett, an outsider who came from office furniture maker Steelcase.
The 58-year-old, born in Argentina and educated at Georgetown University and UCLA, has spent his life devoted to cars.
During his teenage years, he rebuilt car engines and went to work for Toyota after college where he held product and marketing positions, becoming group vice-president for the luxury Lexus brand.
In 2007, he joined Ford after being recruited by then-chief executive Alan Mulally. He ran the carmaker’s European operations between 2015 and 2017 and then headed the company’s mobility and technology divisions, a perch that made it clear to him as a product planner “that from the customers’ viewpoint we have so much more we need to do”.
Confronting the worst recession in nearly a century and the existential threat that electric and autonomous vehicles present for a traditional carmaker such as Ford, he will need his marketing background to help him understand the need for emotion and story around vehicles to command a premium for his models, said Auto Trader analyst Michelle Krebs.
This week he admitted Ford’s competitive landscape had broadened beyond other traditional rivals to include technology companies such as Amazon, Apple and Baidu.
“The ambition for those technology companies in our space is very, very high,” Mr Farley told the Financial Times. “I am sure we will have a frenemy relationship.”
“There’s about 100 different ways that Ford wants to go and needs to go, but how they get there is a big question,” said Brett Smith, technology director at the Center for Automotive Research in Ann Arbor, Michigan.
“It’s this question, this challenge of taking a company that has done one thing really well for 110 years and making it into something that it is not . . . It’s just a really, really big lift.”
Mr Smith added that Mr Farley’s “willingness to expand and explore”, which he showed at Toyota when he launched Scion, a car meant to attract younger drivers, should serve him well as Ford pushes forward with electrification.
With Scion, buyers were allowed to customise their vehicle through branded auto parts, a new approach for a traditional automaker.
Critical for Ford is turning round the stock price, which has been on the slide for nearly a decade, in contrast to rising shares at US rivals General Motors and Fiat Chrysler Automobiles.
The company’s operating profit margins in the key North American market has been low in recent years compared with competitors, while profits in Europe and China have been inconsistent, said Fitch Ratings analyst Steve Brown.
But the seeds for Ford’s current problems predate Mr Farley’s immediate predecessor as chief executive, Mr Brown said. The $11bn restructuring effort that Mr Hackett launched nearly two years ago is an attempt to cut costs in areas such as marketing, product development and testing, while also investing more in the company’s profitable businesses.
Analysts have also criticised Mr Hackett’s vision and lack of clear communication on past earnings calls. The company has given few details on the timing of the restructuring after 2020, said Morningstar analyst David Whiston, “which we believe frustrates the market”.
Ford reported an adjusted $1.9bn loss before interest and taxes in the second quarter. While the loss was smaller than Wall Street expectations, given plummeting sales due to the pandemic, Ford still told investors it expected to lose money for the year.
The company also has about $30bn in debt. In March, it suspended its dividend and borrowed $15.4bn to help it manage after the pandemic forced automakers around the world to shutter plants. Significantly, Ford has slipped to a junk credit rating, while GM and Fiat Chrysler have maintained their investment grade ratings.
“It is a little like they lost their mojo over the last couple years,” Mr Brown said. “They’re trying to get that back, but it’s not easy.”
Mr Smith said: “He’s [Farley] going to have learn to rely on non-traditional helpers. I don’t think Ford can do it all themselves.”