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.