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Ford Moves To Cut Production Of Gas-Guzzling Pickups, SUVs

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The Associated Press

Published: May 23, 2008

DETROIT - Ford Motor Co. is cutting North American production of pickups and SUVs as car buyers seeing 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 closings.

Dearborn-based Ford also on Thursday cut back its projections for total U.S. light vehicle sales in 2008 to 14.7 million to 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 Chief Executive Officer 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 until July.

Ford said last month that 4,200 hourly workers - just more than half the number the company wanted - had accepted the company's latest buyout and early retirement offers.

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 percent to 20 percent in the third quarter, and 2 percent to 8 percent in the fourth quarter. The cuts will primarily affect pickups and SUVs.

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, and 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: Retail sales of trucks and SUVs accounted for just more than 30 percent of sales in April, he said. But Ford is still heavily reliant on the kinds of large vehicles that have been struggling. Ford's F-series trucks, long the best-selling vehicles in the United States, were down 16 percent in the same period.

Still, Mulally said the company is not considering dropping any large SUVs from its lineup. Instead, it is working on improving the fuel economy of its trucks and offering more options.

"There's always going to be a market for the truck-based platforms for their capability to tow and haul," Mulally said.

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