Ford Motor Co. is securing access to cash as economic uncertainty and increased costs related to tariffs cloud the horizon in the months ahead.
Ford has taken out a $3 billion term loan credit agreement, basically a line of credit that acts like a credit card, meaning the money is there if Ford needs it. The loan is with several lenders and it will be administered through JPMorgan Chase Bank, according to a government filing on July 28.
The Dearborn-based automaker said lenders have provided $3 billion of commitments, which are available to Ford to draw upon through July 28, 2026. Any loans drawn under the credit agreement during that time will mature on December 31, 2028.
As part of the loan conditions, Ford must maintain a minimum of $4 billion in its own cash.
Ford spokesman Ian Thibodeau declined to provide specific reasons as to why Ford took out the line of credit, saying only that the “credit’s there in case we need it.”
“We entered a new loan term credit. It’s just an additional measure we take to strengthen our liquidity and provide additional financial flexibility,” Thibodeau told the Detroit Free Press. “We will provide additional color during our earnings call on Wednesday.”
Ford is expected to release its second-quarter earnings results on July 30 after the market closes. For that reason, Thibodeau declined to comment further on the loan citing a quiet period before earnings results.
Companies usually enter into loan agreements when they see economic uncertainty ahead, but still desire to invest in and grow the business. Experts have noted in recent weeks many signs that raise concerns across the auto industry.
For example, President Donald Trump’s recent trade deal with Japan has raised concerns with the group representing General Motors, Ford and Chrysler-parent Stellantis because the deal could trim tariffs on auto imports from Japan to 15% while tariffs on Canada and Mexico remain at 25%.
Matt Blunt, who heads the American Automotive Policy Council that represents the Detroit Three automakers, said on July 22 they were still reviewing the trade agreement but “any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers.”
There also have been some economic indicators that point to a possible recession, which have kept some new-vehicle shoppers on the sidelines, slowing auto sales in June and forcing more new-car discounts to move inventory in July.
Then there is the concern over paying for Trump’s 25% tariffs — the taxes paid on goods when they cross borders — on all vehicle imports and auto parts imports. Ford had warned last quarter that it expects tariffs will cost it about $1.5 billion from its earnings before interest and taxes for the year. GM said tariffs would cost it $4 billion to $5 billion for 2025.
GM experienced the impact of tariffs when it reported last week that its second-quarter net income plummeted 35% compared with the same quarter in 2024 as increased costs and industry uncertainty from Trump’s ongoing automotive tariffs cost the company $1.1 billion.
Stellantis is expected to report its second-quarter results on July 29. But it reported a preliminary 2.3 billion euro ($2.7 billion) first-half loss last week as it faces revamping its product ranges in Europe and the United States and dealing with the impact of U.S. tariffs on vehicles and auto parts.
On Friday, auto parts supplier Detroit Axle said it will close its warehouse on Eight Mile Road in Ferndale and permanently sever the jobs of 102 people on August 25 because of disruptions in its automotive parts supply chain connected to the U.S. import tariff policy.
Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@freepress.com. Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.
This story was updated to add a gallery.
This article originally appeared on Detroit Free Press: Ford takes out a $3 billion line of credit amid economic uncertainty
Reporting by Jamie L. LaReau, Detroit Free Press / Detroit Free Press
USA TODAY Network via Reuters Connect
