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Ford Cuts North American Production of Large Trucks and SUVs, Increases Production of Cars and Crossovers

23 May 2008

Ford Motor Company announced that it is cutting planned North American production and revising downward its near-term North American Automotive profit outlook, while planning further manufacturing capacity realignments, additional cost reductions and changes to its product mix to respond to the rapidly changing business environment in the US.

The company is increasing 2008 North American production of its better selling, more fuel-efficient cars and trucks—Ford Focus, Fusion, Edge and Escape; Mercury Milan and Mariner; and Lincoln MKZ and MKX.  At the same time, Ford is reducing 2008 production of large trucks and SUVs, as gas prices soar and customers move more quickly to smaller and more fuel-efficient cars and crossovers.

We are profitable and growing outside of North America, and our transformation plan in North America is working.  The challenge affecting the entire industry is the accelerating shift in consumer demand away from large trucks and SUVs to smaller cars and crossovers—combined with a steep rise in commodity prices and the weak US economy.

—Ford President and CEO Alan Mulally.

Ford said it now plans to produce 690,000 vehicles in North America during the second quarter, a further reduction of 20,000 units from previously announced planned production levels and a decline of 15% from the second quarter of 2007.  The company plans to produce between 510,000 and 540,000 units in the third quarter, down 15 to 20% from the same period last year.  Fourth-quarter production is expected to be between 590,000 and 630,000 units, down 2 to 8% from year-ago levels.

The second-half production plan includes higher car and crossover production compared with a year ago and will be achieved through overtime and added shifts at Ford’s smaller car and crossover assembly plants.  Large truck and SUV production in the second half will be lower than a year ago, with reductions achieved through a combination of additional downtime, shift reductions and line-speed actions.

The lower overall production, dramatic model mix shifts and substantially higher commodity costs are forcing a change in Ford’s near-term financial outlook, the company said.

Ford now expects 2008 US industry volume, including medium and heavy trucks, to be between 15 million and 15.4 million units.  Ford, Lincoln and Mercury US market share is expected to be approximately 14% this year, supported by the introduction of several new products.

Production of the Ford Flex crossover and Lincoln MKS sedan is under way and soon will begin for the new generation of the F-150.  Ford also just introduced the 2009 Ford Escape and Mercury Mariner small utility vehicles.  They have new 4- and 6-cylinder engines with 11 and 20% more horsepower, respectively, and 5% better fuel economy, thanks to new engine technology, aerodynamic improvements and new six-speed transmissions. Ford now offers more vehicles with fuel-saving six-speeds than any other automaker.

New versions of the Ford Fusion, Mercury Milan and Lincoln MKZ mid-size cars also debut later this year, as do all-new hybrid versions of the Fusion and Milan.

By the end of this year, 70% of all Ford, Lincoln and Mercury products by volume in North America will be new or significantly upgraded compared with 2006 models.  By the end of 2010, 100% of the product lineup will be new, including the next-generation Mustang in 2009, new fuel-saving EcoBoost engines in 2009, a new European-engineered Transit Connect in 2009 and all-new Ford Fiesta small car in 2010—as well as several other vehicles not yet announced.

May 23, 2008 in Fuel Efficiency, Market Background, Vehicle Manufacturers | Permalink | Comments (26) | TrackBack (0)

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This is not a surprise.

Our local Ford dealer (like many other Ford-GM-Chrysler dealers) is stuck with 300+ hard to sell oversized units, but not a single Ford Escape Hybrid available for the next 6+ months.

Why can't Ford (and the other two) produce more reasonable size true hybrids?

Meanwhile, if the Big 3 don't wake up and adjust quickly, Toyota, Honda and Nissan will gain even more.

If you ever needed a work truck ... now is the time ...

In the first quarter of 2008 1400 MW in wind turbines were installed in USA.
Now ,companies are making more reasonable cars.
Due to higher oil prices north american are learning the lesson in the hard way.
¿Is it enough?. Of course not, it´s time of improvements in a 10 times factor, personal transportation with vehicles like BMW´s Clever, VW 1 litre, little hybrids and EV´s. All of them with proven technologies and reasonable prices.

Amazingly, no law was required for this to happen. It's almost like the market will respond to price signals or something.

Who knew?

"Why can't Ford (and the other two) produce more reasonable size true hybrids?
Meanwhile, if the Big 3 don't wake up and adjust quickly, Toyota, Honda and Nissan will gain even more."

Harvey,

Fusion & Milan Hybrids are in the works and here soon if I am not mistaken. If you knew the amount of testing that is done you would be amazed. These folks are working their butts off trying to bring a lot of new cars to the market. Many new intro's between now and 2010. The headwinds of higher fuel prices is happening faster than any engineering and EPA testing lead times. Also rumors of a small pickup dubbed the "F-100" hit the auto airwaves the other day. They are more awake than you realize, I have the privilege to talk to those in the trenches their, but the exogenous winds of time and timing are not a friends to them at the moment IMHO.

Go here for more on the Fusion/Milan:

http://consumerguideauto.howstuffworks.com/2009-ford-fusion-and-mercury-milan-hybrids.htm

Well stated Mario...

And good point Harvey. I just saw an ad for a barebones Ford F-150 for 15 grand. That is so dramatically different from 10 years ago.

Money drives everything. I was recently in the market for a used honda, and could not believe what the prices are coming to for a rusty, high mileage Civic.

I bought a low mileage, used Buick Regal with the 3800 engine. It is incredibly fuel efficient for its size, and people are giving them away. Gotta love that Honda quality though...

Matthew--

Markets are working indeed, but public policy could have been different and used market dynamics to everyone's benifit. The law that would have helped would have gradually increased taxes on gasoline & diesel, starting ten or more years ago. Public policy matters.

Ford has decided to make more cars that are currently out of stock and have a 6 month order backlog, and fewer cars that aren't selling well. It's almost like they WANT to make money or something(!)

Mathew: Amen! LOL

Still, it's going to be a couple years before supply catches up with demand. Until then expect to pay a premium for what hybrids etc are available. Since my desire is lower overall cost, not reduced carbon emissions as such, I'll have to wait.

The problem with depending on public policy is that good public policy is more a matter of chance than design - look at our biofuels policy for an excellent example.

Much better to just let the market do its thing.

Yes, the market is now working but to bad for the big three to be so short visioned not to see the writing on the wall years ago. High oil prices where inevitable whether today or 5 years from now but anyone in the business knew about this.

Sometimes its best to just watch the idiots hit the wall...

Yes bush could have wasted alot of effort telling people what they already knew and were igmoring.. or he could have just invested money into tech so the idiots help pay for more hybrids bevs and fcevs while everyone else sits back and either a enjoy the fact they have money enough to enjoy the nice newly cheap suvs or b enjoy our nice high milage cars as we watch the imbacile herd franticaly pay for all the new tech we want but dont want to pay for ourselves... ie bevs fuel cells erevs and all that spendy stuff.

How do we pay for all this ev bev fcev h2 econ fluz capacitors and hperdynamic spatulas?? 100 million idiots can pay for it over a few years.. thats how.

"If you ever needed a work truck ... now is the time ..."

Fact of matter is MOST people don't need a truck. And until they too become EVs - folks'll just have to drive cars again.

Pity Ford doesn't kick up the Escape hybrid build. They recently outperformed the Honda Civic hybrid in city driving:
38.3 mpg versus the 37.6 mpg of the Civic hybrid.

http://www.hybridcarblog.com/labels/Ford%20Escape%20hybrid.html

Yes the "need" for work trucks in the US has always seemed strange to me - and I'm not talking about leisure users towing trucks - I mean construction, etc. I am an exiled Brit and back over there (where gas has never ben cheap and is now c.$10/gallon if you convert to dollars) very few contractors have big pickups. They either use the ubiquitous Ford Transit, or a small pickup like the ones Mitsubushi, Toyota, et al supply which are almost like a rickshaw with a flatbed (OK slight exaggeration).

It drives me crazy over here when I see a khakis-clad GC driving a F350 double axle to the job site.

>> Our local Ford dealer (like many other Ford-GM-Chrysler dealers) is stuck with 300+ hard to sell oversized units, but not a single Ford Escape Hybrid available for the next 6+ months.

Why can't Ford (and the other two) produce more reasonable size true hybrids? <<

Ford management, in their infinite wisdom, don't want to open a new line for the Escape Hybrid (although it couls support a full line by itself) and currently build them on the same line with regular Escape's. They make more money on the regular Escape's and so, only make 25,000 Escape Hybrid's a year - as that establishes their "green" credentials/fig leaf. They plan to do this through 2009 as well. Component shortage is not an issue they said. Here's to hoping their management realizes what an opportunity they're missing. Here's the article: http://www.autobloggreen.com/2008/05/16/why-is-ford-only-building-25-000-hybrid-escapes-and-mariners-thi/

Dav:

The Big-3 spent $ billions over the last 40 or 50 years to convince (the not too hard to convince He-Man types) that they needed 3 to 4 Tons pick-ups to go to work and to drive to the local pub for a few beers. He who had the biggest would feel stronger and smarter.

They also convinced the 110-120 lbs ladies that they also needed 3-ton VUS to go shopping and drive the kids to school.

Unbelievable but true.

Had the Fed replaced the current 18 cents/gal fuel tax with a progressive additional (2 to 5 extra cents/gal/month) 10 or 12 years ago, the current gas price would be near $10/gal and the Big-3+++ would have been forced to build smaller more efficient vehicles.

Instead of doing that, the lattest politicians (and potential future president) want to fix things will a fuel tax holiday. How bizard can we get.

As I have several friends in the construction ind I can explain...

Mcmansions.

My friend put it simply.. he had a small truck and was in debt. He moves to a medium truck and was eating hot dogs in a small room in a bad area.. He got his big behemoth truck...

The very first mcmansion he was then able to work on paid for the truck his new home his pool his moms home and car and his kids braces colledge fund and chiles every night.. He retired after just a few years of mcmansions and wont ever eat a hotdog again.

It always makes sense to have small and large trucks so you can handle more jobs..

What always got us tho was the little old ladies going to bingo night in a 8800lb mega suv.. an suv packed with 80 year old 4 foor grannies... and the driver.. 3 foot 9.. BABBLE

I still see then going to the bingo games and im still wondering as are everyone else.. HOW THE BLOODY BLUE BLAZES DOES SHE DO THAT?

Where are the hybrid? The Ford Escape Hybrid is the choice of the NY Taxi Fleets. They are tripling the gas milage and by any yardstick a complete success. Why don't they shift the line to gas sippers and maybe they'll experience the success of Toyota?

Yeah, I need my new CrewMax Ltd. 5,840 lb. Tundra so's I kin load up on the jumbo pack o' T-paper down the Costco - after drivin' off the site in my new GAP cargo pants.

Actually, I think the high price of gasoline could make Ford seriously look at selling the second-generation Ford Ka--now in final testing and to be unveiled later this year--in the USA.

Unlike the previous model, the new Ka will only need minor engineering work to make it US-legal, and it would be more "conventional" and potentially less-expensive alternative to the Smart ForTwo. It would certainly sell like hotcakes in California, that's to be sure.

Raymond - I agree. I think we often criticize the Big 3 US car makers for their lack of effective small-end models vs Toyota, Honda, etc. We should understand that is a US statement. For 2 of the Big 3 (GM and Ford), vehicles like the Ka, Fiesta, Corsa, Tigra, AStra have been doing well in Europe for many years. They have the capability and knowledge to do a good 4-door hatchback with a diesel engine that gets 60MPG (Corsa-D example). I think they deserve just a little more credit than we give them. Chrysler on the other hand...............

The reason they dont go full on with the escape hybrid and many others is the same reason toyota didnt till recently. They loose money.

The escape hybrid had alot of issues costing alot of under warranty repairs. The newer model MIGHT fix that and if in a few uears ford thinks it has and can finaly make money off it they will go full tilt.

In the meantime they will fire us workers and hire more mexican workers and make more cars and kess trucks.. hyst as they planned years ago when they hired 150000 workers down there and built 5 plants.

Because of politics and unions they needed to prove 5000% that they cant keep the uaw workers and the us plants running as before.

They lose money on ever car, but they make it up with volume..

By the way, GM has confirmed that the next-generation Opel Corsa will be sold in the USA. Given that the new Corsa is supposed to be unveiled at the 2009 Frankfurt Auto Show, don't be surprised that the new Corsa--sold under the Saturn label--arrives at the same time the next-generation Ford Fiesta arrives in the USA market.

Indeed, the next hot-selling segment in the USA over the next 5-10 years will be B-segment vehicles--the enormous success of the Honda Fit, Nissan Versa and Toyota Yaris points the way for a huge increase in sales of vehicles in this segment. Even Volkswagen is interested--there is now very serious talk that the Polo model could arrive in the USA between 2010 and 2011.

The bursting of the "horsepower bubble"

ie, Americans wanted larger and more powerful cars, but failed to realize that they had to pay for the clear stuff that made them go vroom!

Why is Detroit always 10 years behind the curve?
Duh.

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