Ford Motor Company said it is making further reductions to its North American truck production plan while adding more small cars, crossovers and fuel-efficient powertrains, as the company responds to the continued deterioration in the U.S. business environment and the accelerated shift away from large trucks and SUVs.
"As gasoline prices average more than $4 a gallon and consumers worry about the weak U.S. economy, we see June industry-wide auto sales slowing further and demand for large trucks and SUVs at one of the lowest levels in decades," said Ford President and CEO Alan Mulally. "Ford has taken decisive action to respond to this accelerating shift in customer demand away from large trucks and SUVs to smaller cars and crossovers, and we will continue to act swiftly moving forward."
Ford now expects U.S. industry volume in 2008 - including medium and heavy vehicles - to be between 14.7 million and 15.2 million units, compared with the previous assumption of 15 million to 15.4 million units. Accordingly, in the third quarter, Ford now plans to produce 475,000 vehicles, a reduction of 50,000 units from previously announced plans and a decline of 25 percent compared with the 2007 third quarter. In the fourth quarter, Ford plans to produce 550,000 to 590,000 units, a reduction of 40,000 units from previously announced plans and a decline of 8 to 14 percent compared with the 2007 fourth quarter.
In parallel, Ford is adjusting the public introduction timing of the new 2009 Ford F-150 by approximately two months due to the industry-wide slowdown in the U.S. truck market and the need to sell down dealer inventory of the current model. The new F-150 now will go on sale in late fall.
With these actions, Ford said it now is clear that 2008 pre-tax Automotive results will be worse than 2007, cash outflows to fund operating losses and restructuring will be greater than previous guidance and, unless the economy improves, it will be difficult for Ford to break even companywide on a pre-tax basis in 2009, excluding special items. Ford North America still expects to reduce annual operating costs by about $5 billion by the end of 2008 - at constant volume, mix and exchange, and excluding special items - compared with 2005.
Ford said it will provide more details on changes to its overall plan when it announces second-quarter financial results in July. In the meantime, Ford is taking the following production actions:
- Production of the 2009 F-150 now will begin in August at Kansas City Assembly Plant and in September at Dearborn Truck. One shift will be eliminated at both Kansas City (from two to one) and Dearborn (from three to two). Dearborn Truck will be idled most of the third quarter.
- Michigan Truck Plant will be idled for nine consecutive weeks beginning the week of June 23, in line with demand for the company's full-size SUVs.
- One shift of production will be eliminated at Louisville Assembly Plant for mid-size SUVs in the third quarter.
- The line speed will be reduced at Kentucky Truck Plant for large pickups in the third quarter.
- The line speed will be reduced at Chicago Assembly in the third quarter for full-size sedans.
- Production will wind down at Cuautitlan Assembly Plant in Mexico by the end of 2008. The plant, which now produces large pickups, will be retooled for production of the new Fiesta small car for North America beginning in early 2010.
Ford also is taking the following actions to increase capacity in the third quarter:
Production at Ford's stamping, engine and transmission plants is being adjusted in line with the changes in assembly capacity.