DETROIT -- After boasting of record profits earlier in the year, Ford Motor Co. last week dropped a profit warning as jarring as concrete blocks hitting the bed of an aluminum pickup.
Executives said the automaker is spending more than anticipated on incentives as U.S. vehicle demand softens, generating less revenue than expected in China and facing at least a $1 billion hit over the next three years from the Brexit vote in Europe.
One Wall Street analyst, Adam Jonas of Morgan Stanley, called the abrupt shift in attitude a possible "watershed" moment for the industry, which largely had brushed aside bubbling concerns about plateauing U.S. sales and rising discounts. Many of the looming threats that Ford CEO Mark Fields laid out are issues other automakers also have to confront, but Ford is the first to acknowledge them so starkly.
"We remain committed to our 2016 guidance, but we're facing risks to achieving that," Fields said after Ford posted a 9 percent decline in second-quarter net income, which fell short of Wall Street estimates. "We're seeing more pressure throughout the business for the remainder of this year, so as a result, we're calling for the second half of this year, and particularly the third quarter, to be much weaker than normal."
The comments were a significant departure from Ford's confidence in April, when the company posted its highest quarterly pretax profit ever. "Essentially everything has improved," CFO Bob Shanks said April 28. "We're reconfirming all of our guidance to be as good as if not better than the record year that we had in 2015."
Among the biggest surprises since April was the Brexit vote June 23, in which the United Kingdom elected to leave the European Union. Ford said it now sees a weaker U.K. market costing the company $200 million this year and as much as $500 million in each of the following two years.