Ford Cuts Truck/SUV Production as Gas Prices Hurt Sales

[ARCANGEL]

Ford cuts N. American production, cuts profit goal
Thursday May 22, 11:55 am ET
By Dee-Ann Durbin, AP Auto Writer


Unsold 2008 Super Duty pickup trucks sit at a Ford dealership in
the south Denver suburb of Littleton, Colo

- Ford cuts N. American production, no longer expects profit by 2009 as gas prices hurt sales

DETROIT (AP) -- Ford Motor Co. is cutting North American production of pickups and SUVs as car buyers eyeing record gas prices turn toward more fuel-efficient models. The automaker says it no longer expects to return to profitability by 2009 and didn't rule out layoffs and plant closures.

Dearborn-based Ford also on Thursday cut back its projections for total U.S. light vehicle sales in 2008 to between 14.7 million and 15.1 million vehicles. That's down from 17 million vehicles as recently as 2005. Light vehicle sales exclude heavy trucks.

"We all would like the basic business environment to not have deteriorated, but clearly the most important thing we can do for the long-term success of the Ford Motor Company is deal with this reality," Ford President and Chief Executive Alan Mulally said in a conference call Thursday.

Mulally said the company expects a longer and slower recovery from the economic downturn than it did several weeks ago and doesn't plan to set any further profitability targets at least July.

Ford said last month that 4,200 hourly workers -- just over half the number the company wanted -- had accepted the company's latest buyout and early retirement offers. On Thursday, Ford said it will continue offering buyouts to manufacturing workers on a plant-by-plant basis. Ford plans to give more details about possible salaried layoffs and plant closures in July, he said.

Ford shares dropped 70 cents, or 9 percent, to $7.10 in midday trading.

Ford said it will cut production by 15 percent in the second quarter, 15 to 20 percent in the third quarter and 2 to 8 percent in the fourth quarter. The cuts will primarily affect pickups and sport utility vehicles, which have seen sales plummet in recent months due to rising gas prices and the slowdown in new home construction.

Ford plans to increase its production of cars and crossovers through additional shifts and overtime. Ford's smallest offering, the Focus sedan, saw sales jump 29 percent in the first four months of this year, while its Ford Edge crossover was up 38 percent.

As recently as 2004, trucks and SUVs accounted for 70 percent of Ford's sales volume, according to George Pipas, Ford's top U.S. sales analyst. That has reversed completely: Retail sales of trucks and SUVs accounted for just over 30 percent of sales in April, he said. But Ford is still heavily reliant on the kinds of large vehicles that have been struggling in the current market. Ford's F-series trucks, long the best-selling vehicles in the U.S., were down 16 percent in the same period.

http://biz.yahoo.com/ap/080522/ford_cuts.html?.v=10

[likearock00]

Smart move Ford. It's much better to have an adequate supply vs having huge surplus that needs huge incentives to get rid of. I guess they learned from the 2001-2002 depression!

[ARCANGEL]

i agree GM should continue cutting there production!

[1931Chevy]

If gas prices continue climbing I think all of the other manufacturers will have to cut production, even all mighty Toyleta and what worries me is the intro of the new F150 in this bad times I hope the F100 is on fast track so it can arrive sooner that 2011 because IMO the pickup market will not dissapear like the minivan or SUV market but it will shrink to levels not seen since the 70s

[megeebee]

It may have been a mistake to tell the world that they would be profitable by 2009.

[1931Chevy]

I dont want to burn GM but atleast Ford had a target on when to be profitable and our GM still burning money and still dont hear any news on profitability

[VCDJ]

New f-150 is coming out. Silverado is in serious trouble. Just imagine how fast silverado sales will fall when f-150 and ram are out. But ford is going to break even in 09. I wish that we can hear that from gm. Rick still has not clue when they will break even or make some profit. With GMT-900 falling down so fast and about to fall down even faster with new f-150 and Ram things are about to get much worst for gm.

[Rocket 88]

Originally Posted by VCDJ

New f-150 is coming out. Silverado is in serious trouble. Just imagine how fast silverado sales will fall when f-150 and ram are out. But ford is going to break even in 09. I wish that we can hear that from gm. Rick still has not clue when they will break even or make some profit. With GMT-900 falling down so fast and about to fall down even faster with new f-150 and Ram things are about to get much worst for gm.

I respectfully disagree.

While newer products typically steal some initial sales it does not make the excellent GM pickups completely uncompetetive. Also, many truck buyers are very brand loyal. Hey, how excited do think Ford and Dodge are to be spending a lot of money to launch a product the market is moving away from?

In any case this is a problem GM, Ford and Dodge will all need to cope with because the pickup market will (most likely with $4/gallon gasoline) continue to shrink. That is just the reality. People who really need trucks will continue to buy them, but a lot of the pretenders won't.

Regarding when GM will be profitable, I agree: Nobody knows.

[tgagneguam]

Ford Motor Co. is cutting North American production of pickups and SUVs as car buyers eyeing record gas prices turn toward more fuel-efficient models.

I love that in a relatively free market system consumers tell companies what they should be making (and what they need to cut back on). It's statements like these that reinforce the notion that government intervention in the form of useless legislation like CAFE is indeed just that: useless. Raise the price of gasoline, and consumers will figure out that more FE vehicles are the order of the day.

The automaker says it no longer expects to return to profitability by 2009 and didn't rule out layoffs and plant closures.

Funny that this would be Ford's (and to some extent Detroit's) notion of how to return to profitability. It seems that this is the main means by which Detroit has been trying to claw back to sustainable profits, but they also forget that this hasn't worked, still. Sure, rightsizing is appropriate, but the driving force behind profits-as demonstrated in other, more successful parts of their operations-is product, not continually cutting to the marrow and beyond in an effort to find profit. I have faith that Detroit will eventually learn that lesson. One day.

[gardnet1]

The production cuts were expected. GM did; toyoduh did and nissen has all but given up on the titan; not sure about Dodge but they know better than to encore 2006 when they ignored sky high inventories, worked overtime anyway and then tried to force feed dealers.

The surprise was Ford announcing a revision to the restructuring plan. I can't see many more salaried positions being eliminated as they already shed about 35-40,000 of them. They can surely get rid of some line workers at Wayne, Dearborn, KC, Twin Cities and in KY. They will probably go with another targeted buyout with the threat of involuntary separation if quotas are not met.

Maybe they will shed some light on product plans such as the F100 & baby Ranger. Heck I would take the existing Ranger and drop a 2.0L in with a 5spd, 2wd and small tires and market an eco truck for the interim. I would like to see Ford announce that the C-Max, S-Max and KA are heading over here as well. Pulling the Fiesta over a few months early would also be nice. Maybe Ford will decide future products for their plants such as the rumor of Fiesta being produced in KY, Euro-Focus stays in Wayne?

I expect Ford to announce some plant closings that will take place towards the end of the current UAW/CAW contracts in 2011. We pretty much know that St. Catherines ONT will be shuttered along with Twin Cities. I think Wayne Truck, the Explorer KY facility and Avon Lake OH are all in trouble. KC would be a bit of a long shot because they also have the Escape but they could be scaled back and lose product.

Could this be the announcement for sale of Volvo or the demise of Mercury? If they get rid of Mercury, then Jill Wagner should become the spokesbabe for Ford or Lincoln.

[mpsrent]

While there still remain many practical uses for trucks that will not go away, e.g. towing, large families, work applications, the days of the average person using a truck as a daily commuter are starting to fade away. Sure, some people will always love driving a truck (I know I do) but the economic factor will force us into fuel saving cars.

Its reality and the sooner the market adjusts the better.

[skylark68]

I don't like seeing this happen even though I'm not a Ford guy. Ford's just going to have to get that new Taurus on the market and back off of F-150 production.

[2b2]

^^ I've said it before
in the not-distant future imho the largest Ford-brand sedan will be the Fusion

[doh]

It is all good BUT Ford has turned the Focus into a "After you turn 60 Y/O car" From an entery level "My first new car!"

Honestly, we have sold 1/2 of the Focus's we did last year, and the demographics have changed from 20 something's and 60 something's. To 60 somethings and 70 something's.

The Fusion is promising, and I have even seen customers coming out of pick up trucks, to switch to them for fuel mileage. But it hasn't started the "Flying off the lot stage" yet.

The public just does not shop at Ford for fuel economy

[TORRED1]

Originally Posted by ARCANGEL

i agree GM should continue cutting there production!

wait a minute, didn't GM lose sales because of the AA strike, ya sure