Ford achieves quality milestone, as CEO targets flawless new vehicle launches

DETROIT – Ford Motor, an icon of American manufacturing long hobbled by a reputation for costly quality issues, has secured a crucial victory in its turnaround effort. The automaker has been named the top mass-market brand for initial quality in an influential industry study, a milestone CEO Jim Farley is leveraging as a springboard for his most ambitious goal yet: executing a series of "flawless" new vehicle launches that will completely refresh the company's lineup.

For nearly a decade, Ford has been a leader in a category it never sought: vehicle recalls. The persistent quality problems have eroded billions from its bottom line, damaged customer trust, and presented a significant risk for investors betting on the company's transition to electric and software-defined vehicles.

Now, with external validation in hand and internal metrics showing progress, Farley asserts that a new era of quality is dawning in Dearborn. "Our best days are in front of us as we continue to execute this quality turnaround for our investors, for employees, for our customers," Farley told CNBC in an exclusive interview.

The High Cost of Getting It Wrong

The financial and reputational damage from Ford's quality struggles has been immense. The company's performance has been a focal point for Wall Street, with analysts frequently citing unbudgeted warranty expenses as a primary threat to earnings guidance and long-term strategic plans.

The numbers paint a stark picture of the mountain Ford has had to climb.

• A History of Recalls: The automaker set an unwelcome industry record in 2025 with 153 separate recalls covering 13 million vehicles. The trend has continued, with 53 recalls impacting over 12 million vehicles so far this year. Just this week, Ford recalled another 741,195 SUVs and F-150 pickups from model years 2018 to 2021.

• The Warranty Drain: These issues have directly hit the company’s finances. Warranty costs—the funds set aside to fix defects post-sale—peaked at a staggering $4.8 billion in 2023 and have cost the company billions during Farley's nearly six-year tenure as CEO.

• A Turn of the Tide: Ford is now showing tangible progress. The company reported a $1.5 billion reduction in warranty and materials costs in 2025 (adjusted for volume and mix) and is targeting further cuts in 2026. This progress has been validated by four consecutive quarters of year-over-year warranty cost improvements.

This financial turnaround has caught the attention of investors. In a May 15 note, Barclays analyst Dan Levy stated that while warranty costs "had been a clear drag to earnings," Ford "appears to have 'turned the corner.'" He added, "We believe the 1Q warranty improvement is encouraging, yet believe further improvement will still be needed."

A Landmark Achievement in Quality

The clearest sign of progress came last week with the release of J.D. Power's 2026 U.S. Initial Quality Study (IQS), an influential benchmark that measures problems reported by owners within the first 90 days of ownership.

The results marked a dramatic reversal of fortune for Ford.

• Top of the Charts: The Ford brand was named the No. 1 mass-market brand for the first time since 2010. It ranked third overall among all brands, trailing only luxury marques Porsche and Genesis, and notably placing ahead of Toyota's Lexus.

• A Monumental Leap: This achievement represents a significant jump from its 23rd-place ranking in the same study in 2023. Ford showed improvement across nearly every category, including complex areas like software, infotainment systems, and powertrains.

• Market Reaction: Following the June 25 announcement, Ford's stock rose 2%, marking one of its best trading days of the month and signaling investor approval of the validated quality improvements.

"I'm very proud that an American car company can beat the world in initial quality, but obviously none of us are satisfied," said Farley, who spent nearly two decades at quality-leader Toyota before joining Ford.

Farley's Blueprint for Flawless Launches

With this momentum, Farley is raising the stakes. He has committed Ford to flawlessly launching an entirely new portfolio of vehicles across North America in the coming years, a task fraught with complexity.

"We're going to have all new vehicles across our entire North America range in a couple of years, and so that whole new lineup, we have to launch all those perfectly," Farley stated.

Executing this will require rigid discipline, as modern vehicle launches—especially those involving new electric powertrains and complex software architectures—are notoriously difficult. A single issue can create a domino effect, leading to costly delays and recalls. Farley's strategy involves a fundamental overhaul of Ford's operations.

• Accountability and Incentives: The CEO has restructured Ford's leadership and process, directly tying executive bonuses and other incentives to tangible quality improvements.

• Proactive Engineering: The company is shifting from a reactive to a proactive model, revamping its engagement with suppliers and internal teams to identify and resolve potential problems long before a vehicle enters production.

• Data-Driven Discipline: Lessons learned from past failures are being systematically integrated into the product development process to prevent the same mistakes from being repeated.

A Milestone, Not the Destination

While the J.D. Power IQS award is a significant public victory, Farley and his team acknowledge it is only one step on a much longer journey. The crucial distinction lies between initial quality and long-term durability, where Ford still has considerable ground to make up.

• The Durability Gap: In J.D. Power's most recent U.S. Vehicle Dependability Study (VDS), released in February, Ford's brands ranked well below the industry average. The VDS measures problems over a three-year ownership period. The Ford brand ranked 18th, while its luxury Lincoln brand placed 19th.

This data highlights the next major challenge: ensuring that a vehicle that is great on day one remains reliable and trouble-free on day one thousand.

"We have so much left to do to be the No. 1 quality brand in all attributes," Farley conceded, emphasizing the need to continue driving down warranty costs and improving the company's long-term dependability scores.

What's Next

Ford has successfully demonstrated it can engineer and build vehicles with high initial quality, a feat that has bolstered both morale and its stock price. The focus now shifts to execution and sustainability.

Investors and industry observers will be watching closely to see if the company can maintain this discipline through its upcoming product blitz. The ultimate test will be whether Ford can translate its initial quality wins into the long-term dependability that builds lasting customer loyalty and finally sheds the financial burden of its past. The flawless launch of its next-generation vehicles will determine if this milestone marks a true turning point or merely a temporary reprieve.