Just as Ford Motor Co. stock is having one of its best days of the year, buying a new car is becoming increasingly difficult.
Ford (female) Shares of the automaker rose 12.4% on Thursday after the automaker reported better-than-expected adjusted earnings and raised the lower end of its annual profit forecast.
That’s good news for shareholders.
Ford’s results show an uncomfortable trend for people walking into dealerships.
Ford expects merchandise spending to increase by nearly $2.5 billion this year, compared with its previous forecast of about $2 billion. The costs of steel, copper, computer chips, gasoline and transportation are all rising.
The pressures come at a time when Americans are paying near-record prices for new cars.
The average sales price of a new car in September was $50,562, just $52 below the previous record set in December 2025. The average monthly payment climbed to $776, according to Cox Automotive.
That friction has fueled Ford’s recent gains.
Despite rising expenses, Ford has managed to remain profitable. However, there may be another reason why buyers are holding out for much cheaper cars.
Ford absorbs billions in costs while protecting profits
Ford reported third-quarter revenue of $49.5 billion and net profit of about $2 billion.
Adjusted earnings before interest and taxes, the metric Ford uses to track its underlying operating performance, edged up to $2.7 billion from $2.6 billion a year earlier.
Ford also raised the lower end of its full-year adjusted operating profit forecast.
The company’s current guidance is $10.5 billion to $11 billion, compared with its previous estimate of $10 billion to $11 billion.
Ford It said its cost-cutting efforts, growing software and services business and operational improvements helped it weather the quarter.
That explains why investors reacted so violently.
Ford’s core profitability remains stable despite pressure from uncontrollable spending.
The most obvious example is the cost of goods.
Ford raised its forecast for commodity headwinds this year by nearly $500 million to about $2.5 billion as costs for steel, copper and other commodities surge.
Transportation costs have also increased due to rising fuel prices, while computer chips remain a significant expense in cars that use a lot of software.
From the showroom to the car customer, the numbers seem far apart.
They are not.
The body of the truck is made of steel. Copper is used in increasingly electric vehicles. Everything is controlled by a chip, including safety features and entertainment systems. Diesel prices have pushed up the cost of shipping parts and complete vehicles across the country.
As these inputs become more expensive, eventually someone has to pay the price.
“We’re very focused on driving efficiencies across our business,” Ford Chief Financial Officer Sherry House said.
Ford’s job is to prevent all of these higher costs from eating into profits.
The problem for consumers is that maintaining prices is a way for automakers to protect profits.
Ford stock rises as new car prices near record levels
According to Ford, its pricing is expected to rise about 1% this year Reuters.
That doesn’t mean Ford will increase the price of each vehicle by 1%.
Car prices reflect the model buyers purchase, incentives, trim levels and other variables.
However, the larger market has demonstrated why affordability remains an issue.
According to statistics, Americans spent an average of $50,562 on new cars in September. Kelley Blue Bookup 0.9% from August and just $52 below the previous record in December 2025.
Even those interested in finding cheaper cars can’t avoid the market entirely.
In September, the average price of a small car was $27,977, up 3.2% from the previous year. The average price of a subcompact SUV rose 1.5 percent to $31,213.
The average price for a full-size pickup truck, an important market for Ford, is $67,573.
At that point, Ford’s profit story becomes a story about family budgets.
Most households don’t use cash to buy cars.
They provide funding.
According to data, the average monthly payment for a new car reached $776 in September, the highest level since December 2023 Cox Automotive. The average buyer needs about 35.7 weeks of median income to purchase a new car.
Income rises and interest rates fall.
In September, however, rising vehicle costs overshadowed some of the gains.
Potential buyers of an F-150 or Bronco therefore see things differently than Ford shareholders, who believe the company has effectively secured its profits.
Cars are still expensive.
Furthermore, based on Ford’s recent cost estimates, there’s no reason to believe the manufacturer will suddenly have billions to spend cutting costs.
Bill Pugliano/Getty Images
Ford still needs Americans to keep buying
Ford’s strong stock reaction has another flaw.
According to statistics, its U.S. car sales fell by 8.6% in the first nine months of this year Reuters. The sales decline reflects in part Ford’s phase-out of its Escape SUV and weaker sales of electric and hybrid vehicles.
This requires a delicate balance.
Ford’s goal is to maintain the price of each vehicle.
However, it also requires a sufficient number of customers to continue purchasing them.
To meet more affordable needs, Americans have begun turning to lower-cost car models.
The industry’s overall price increase was relatively small in September from a year earlier due to higher sales of cheaper models, according to Kelley Blue Book.
In other words, customers will adjust their choices even if manufacturers don’t cut prices significantly.
A person may decide to purchase a smaller SUV instead of the larger SUV they originally intended to purchase.
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Customers can choose less expensive décor.
Some people may decide to enter the second-hand market or keep their old car for another year.
For Ford, keeping prices high is only effective if buyers continue to believe the product is worth their money.
There is evidence that companies can still set prices.
RBC Capital Markets analyst Tom Narayan told Reuters that automakers continue to benefit from strong demand, especially in attractive segments.
Ford’s F-Series remains critical to this approach.
Chief Executive Jim Farley said Ford is purposefully taking tighter control of its full-size truck inventory, targeting around 55 to 60 days of supply instead of the more common 80 to 100 days.
This is important because dealers with excess inventory often force manufacturers to offer higher discounts.
Ford seems committed to avoiding this cycle again.
Strict control over inventory may be beneficial to investors’ profits.
That may be less encouraging for consumers expecting excess supply to lower costs.
Ford stock rally doesn’t address affordability issues
Ford’s most recent quarterly results show why the automaker’s positive earnings reports don’t always translate into positive news for consumers.
Shareholders pointed to several positive aspects.
Ford beat adjusted profit expectations, generated $4.7 billion in adjusted free cash flow, and raised the lower end of its annual profit forecast.
In response, the stock rose 12.4% on Thursday.
However, it was a different story for the family sitting across from the dealership.
Today, a typical new car sells for more than $50,000.
The average monthly payment is nearly $800.
Additionally, one of the largest U.S. manufacturers told investors that the cost of materials needed to build such vehicles is rising sharply.
Ford can meet these challenges by reducing internal costs, managing inventory, increasing software and service sales, and improving production efficiency.
Investors expect management to do just that.
However, as Ford gets better at protecting profits, it may no longer feel the need to drastically reduce the number of vehicles it sells to cope with rising expenses.
Both approaches carry risks.
If affordability drops too much, customers may delay purchases or reduce prices, ultimately undermining Ford’s pricing power.
That makes one number more important than Thursday’s share price rise.
Despite lower U.S. sales, Ford expects pricing to remain healthy.
As long as consumers continue to accept these prices, Ford can tolerate billions of dollars in increased spending without losing profit margins.
Ford’s profits suggest Americans may still have to wait for the cost of new cars to fully come down.
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