If Ford CEO Jim Farley could go back in time, he would have moved much more decisively to fix the automaker's nagging quality problems, he admitted to investors Thursday.

Why it matters: Ford forfeited billions of dollars in profit over the last few years because of soaring warranty claims and delayed product launches due to manufacturing troubles.

• "I think we all have regrets and that's a big one for me," he said, according to a transcript of his remarks. "So it's a humbling thing."
• Farley's regret, delivered at a Wolfe Research investor conference, was a rare mea culpa for any CEO — much less the head of a storied industrial icon like Ford.

What they're saying: Farley, who's been Ford's CEO for three years, said he wished he had the same "laser focus" on transforming the company's industrial system as he did on restructuring its money-losing overseas businesses.

• "The capability atrophied in engineering, supply chain and manufacturing at Ford," Farley said, adding that he talks about it "every day" with CFO John Lawler.
• "It needed a much more fundamental reset than I had realized."

By the numbers: In 2023 alone, Ford logged $1.9 billion in excess warranty costs for vehicles needing repairs.

Zoom in: In his first year as CEO, Ford had a record number of recalls in the U.S., Farley said — and yet 91% of managers were earning their full bonus.

• "So now that is not the case," he said.
• "You have to set up a culture shift, a performance reward system where every engineering manager, purchasing component manager, every plant manager is fully accountable for the quality and cost of their work."

Between the lines: Last year's launch of the hugely profitable F-Series Super Duty pickup was "the line in the sand for this management team," Farley told investors in a separate Feb. 6 call.

• Ford slowed down that launch to do more intensive testing and validation, "and boy, did it cost us," he said — $1 billion in lost profit.
• "But it was the right trade-off for our company and our customers."

Where it stands: In 2023, Ford saw a 10% improvement in initial quality — a measurement of the first 90 days of ownership — for the first time, according to Farley.