NEW YORK (AFP) - Ford warned Thursday (July 28) that it could miss its 2016 profit forecast due to a plateauing of auto sales in the US market and slower economic growth.
Ford, which had described the first quarter of 2016 as "absolutely terrific," offered a much more subdued outlook as it cautioned that higher incentives in the critical North American market could dent profitability.
"We are committed to meeting our guidance but it is at risk," Ford chief financial officer Bob Shanks said on a conference call with reporters.
"We don't see growth, at least in the near term."
The bleaker outlook came after Ford reported an 8.8 per cent drop in second-quarter earnings to US$2 billion (S$2.7 billion).
Revenues rose 6 per cent to US$39.5 billion.
Shares of Ford and other US automakers fell sharply following the Ford outlook, which contrasted sharply with the sunny view offered last week by rival General Motors.
Ford joined some other industry experts who have said the American auto market will have trouble topping the record of 17.5 million cars sold in 2015, a peak in a multi-year boom supported by strong sales of sport utility vehicles and other large autos.
Ford now projects 2016 US economic growth of 1.9 to 2.3 per cent, down from the April forecast of 2.1 per cent to 2.6 per cent.
Ford also trimmed its global growth forecast, citing the surprise British vote to leave the European Union and uncertain conditions in China.
One positive note was a near tripling of European operating profits to US$467 million.
However, Ford cautioned that Brexit could hit Ford's results by $200 million in 2016 and US$400-500 million in 2017 due to the sharp fall in the British pound.
Ford shares tumbled 9.5 per cent to US$12.52 in late-morning trade.
Rivals General Motors and Fiat Chrysler lost 4.1 per cent and 5.3 per cent, respectively.