Ford cuts sales view, delays new pickup 2 months

DETROIT — Faced with a continuing plunge in pickup truck and sport utility vehicle sales, Ford Motor Co. on Friday tried to deal with the mess by delaying production of the new F-150 pickup truck and announcing further factory cuts.

Shortly after Ford's announcement, Standard & Poor's Ratings Services said it is reviewing ratings on Ford, Chrysler LLC and General Motors Corp. with the possibility of lowering them due to the deteriorating U.S. auto market. Also, Moody's Investors Service changed its ratings assessment for Ford and Chrysler from stable to negative.

Lower credit ratings can boost the a company's borrowing costs.

Shares of GM sank to their lowest level in more than 26 years while Ford tumbled more than 8 percent.

Dearborn-based Ford also said Friday that its loss on automotive operations will worsen in 2008 and that it will be difficult for the company to break even in 2009 as it had predicted just one month ago.

Ford's moves are the latest in a series from U.S.-based automakers as they struggle against an economic downturn and $4 per gallon gasoline that has sent buyers fleeing from pickups and sport utility vehicles, their traditional moneymakers.

"It's a critically tough environment," said Efraim Levy, a senior industry analyst with Standard & Poor's. "It's almost like anything that can go wrong is going wrong."

Ford conceded in a statement that the U.S. market is declining this year, reducing its industrywide light vehicle sales forecast. The company now predicts sales will not rise above 14.9 million and could go as low as 14.4 million, which would be the lowest level in 13 years according to Ward's AutoInfoBank.

Just a month ago, Ford dropped its forecast to a range of 14.7 million to 15.1 million. The company's sales fell 16 percent in May.

Because of the crumbling sales, Ford said Friday it will cut third-quarter production by another 50,000 vehicles. It now plans to produce 475,000 vehicles, 25 percent fewer than the third quarter of last year.

The company also says fourth-quarter production will drop by another 40,000 vehicles to a range of 550,000 to 590,000. That's on top of a previously announced 8- to 14-percent cut from the fourth quarter of last year.

Most of the production cuts will come from extending the normal two-week summer shutdown at pickup and SUV plants, as well as shift and assembly line speed reductions, the company said in a statement.

Ford said it will now introduce the new F-150 model two months later than normal, in late fall instead of its earlier target of late summer. F-series trucks accounted for 27 percent of Ford's U.S. sales last year, generating much of the company's revenue. But sales are off 19 percent for the first five months of the year and plummeted 31 percent in May.

The Dearborn-based automaker also said it will increase production of its Focus small car, as well as the Mercury Mariner and Ford Escape small SUVs.

It also said it will bring production of the next generation European Focus and Fiesta small cars to North America starting in 2010 "as Ford confirms it is revising its product plan to add more small cars, crossovers and fuel-efficient powertrains."

Ford expects to detail further changes to its restructuring plan when it announces earnings in July. It would not rule out plant closures and further layoffs. Already the company is looking to cut about 12 percent of its salaried work force.

On Friday, Ford announced cuts at seven truck and SUV factories during the remainder of the year, including the idling of the truck factory in Dearborn for most of the third quarter and the temporary closure of a Wayne truck factory for nine weeks during the summer.

It also announced production increases at three factories that make small SUVs and cars.

"We view the move to smaller, more fuel-efficient vehicles as permanent, and we are responding to customer demand," Ford CEO Alan Mulally said in the statement. "For the long term, we are moving fast to introduce more small cars, crossovers and fuel-efficient powertrains _ including more hybrids _ and we will adjust our manufacturing facilities to match our updated product lineup."

Ford shares fell 51 cents, or 8.1 percent, to close at $5.81. GM shares dropped $1, or 6.8 percent, to close at $13.79 after dropping as low as $13.65. The Center for Research in Security Prices at the University of Chicago said that was their lowest level since GM shares changed hands at $13.59 in February 1982.

The company also said its 2008 automotive financial results will be worse than in 2007, when the company posted an overall net loss of $2.7 billion. As late as May 22 the company predicted it would break even in 2009, but Ford now warns that will be difficult on a pretax basis.

Levy said it's not just the decline that's troubling, it's the rapid shift away from trucks, the traditional money makers for the Detroit Three.

"If people aren't buying pickup trucks, that's where Ford's bread and butter is, so where are they going to make their money?" Levy asked. "The shift in cars is so rapid that the domestic brands in particular aren't going to be able to produce enough to match demand."

Ford, which has mortgaged its factories and blue oval logo to stay in operation, should have enough cash to stay afloat into 2010 when the economy is expected to recover and the Detroit Three begin to see savings from shifting hourly retiree health care costs to the United Auto Workers, Levy said.

"I think they had some cushion for the cash needs when they mortgaged the Ford brand, but the environment that's appeared since then has changed," Levy said. "It's going to make it ever more difficult for them to make the turnaround. That's not saying they can't."

Earlier this month, GM announced it would close four truck and SUV factories. On Thursday the company said it would delay work on the next-generation of full-size pickups and SUVs to focus resources on more fuel-efficient vehicles.

Chrysler made cuts earlier in the year and has confirmed the idling of its Warren, Mich., truck plant for five weeks this summer before it begins production of the redesigned Dodge Ram.

Spokesman Ed Saenz said the company has no immediate plans for further cuts in its truck production and the Ram would be launched on schedule this summer.

Comments

[Pat15]

Just keep in mind ...That with Ford not been able to sell cars is a headache that have to deal with now ...However, the top echelon in the Company continue to draw big salaries and the benefits ...it is the workers who get laid off & lose their jobs pay the price ...Their families lose everything ... The big corporate boys vision has always been short-sighted ...& even now they could not care less .They coul d easily bring those small compact from europe to sell here ... Whereas Toyota/Honda cars there is a waiting list for hybrids ... I had GM car needed constant maintenance / problems ..Now I own 2 civic Hondas & require very little maintenance ...Why wud I buy a GM/Ford/Chrysler car ..No reason to do that... Serves these automakers right ...

[takingbkourcountry]

Yet another problem is every time gas goes down in price, Americans get amnesia as well as the 'entitlement thingy' for goliath gas guzzlers. I sometime wonder if we, as a nation are really that
ignorant of the rest of the world-or just selfish greedy bastards? hmmmmm

[outnow]

The all new Pigmobile Model should be hitting the market soon. It is huge and gets one mile per gallon. Bush is supporting another massive tax deduction for the Pigmobile. Buy one now. Oil prices are going down since we invaded Iraq.

[GerryS]

The new F-150's look so cute, I want one to use as a hood ornament on my even bigger SUV!

[Raymondf]

Couldn't load many groceries in vehicle pictured.

[MajorKong]

Can't afford many groceries with price of fuel.

[jackpinesavage]

(Full disclosure: born and raised Detroiter) Surprise, surprise, the Big Three got caught with their pants down...again. The Japanese entered the US market in force by the same scenario. There is no long term thought in the corporate boardrooms of US auto manufacturers, none at all.

Compare and contrast the way things are done. In 1999, Honda began research on hydrogen fuel cell vehicles. The first FCX's are being leased in California this summer. GM's hydrogen vehicle (the Hywire) is perpetually a decade from production.

We all know that Americans love their big trucks. Those vehicles would be the best place to install hybrid power trains (the 10% efficiency jump would be most noticeable in them, and torque is what those vehicles need...something that an electric motor provides in spades). So the Big Three could have kept on building those things if they had done it right; now it doesn't matter.

These corporations can build high-mileage vehicles for sale in Europe and Asia, but whine like babies that they can't do the same thing here...and apparently Congresspeople don't realize that Opel is GM Europe or that Ford in Europe is still Ford.

You wanted sat nav, all sorts of interior electronic dohickeys, and the best cup holders on the planet...well, you got 'em. Now go out and buy a Toyota, because you'll put more food on American tables by doing so than with the purchase of any domestic automobile.

[metogamekun]

While the domestics are closing plants and laying off manufacturing workers, I hope some heads roll at higher levels for not being able to see past next Tuesday. Did they think $2 gasoline would last forever?

But let's not forget the American consumers' role in this. Way too many people were willing to say "it's my right as an American to drive what I want," even if it was an oversized, overpowered, gas-sucking giant. I'd like to say "serves you right," but there are too many people hurting now who were lolled into apathy due to inexpensive gasoline and the big three pushing these things like crack.

[SEQUOIABISON]

Hello earth to Ford, what the hell is taking you so long to understand we are facing a crisis?

To allow the Japanese to take over the American market while you guys were asleep at the wheel, still building dinosaurs that nobody wants anymore, is a disgrace and an affront to our intelligence as a progressive nation.

[jackpinesavage]

When did we become a progressive nation? I would dearly love to hear of some symptoms. We are a regressive, reactionary nation. Where we a progressive nation, we would have confronted our fossil fuel for transportation issue during the era of "peace and prosperity" under Bill Clinton. But it was in that era that the SUV rose to prominence as the passenger car of choice. We reacted to good times by blowing the money and we're reacting to bad times by gnashing our teeth and wringing our hands. There is no progressivism here.

[chinacatsunflower]

were we a progressive nation we would've taken jimmy carter seriously all those years ago. including decriminalization of a *plant*.

[InofTouch]

I didn't get the picture...I thought there were going to be kiddy cars of hybrids

[MajorKong]

I guess people figured out that they really didn't need a 3-ton GMC Yukon to haul their kid to soccer practice.

[TakeSake]

They'll need it when soccer balls weigh 2000 lbs.

[KillTheMessenger]

Some kids seem to get close to that, these days.

[hoopesaz]

Jump for joy! The market economy is finally going to achieve more in a few short months than years of blowhards talking about carbon credits and other such feel good but foolish ideas for trying to make a difference in the way we use energy.

I'm sure Al Gore is going to take credit for the change, but we'll all know the truth.

[KillTheMessenger]

Except that there is no reduction in CO2 emissions here, only serious transfer of wealth from the wrong people to the wrong people. If we want to seriously reduce CO2, a hefty carbon tax is the only way, something like $400/ton would do the trick. But it will never happen.

[axt113]

Toyota drank their milkshake

[KillTheMessenger]

"It's almost like anything that can go wrong is going wrong."

A matter of bad luck? How delusional is that? American auto makers have done everything they could for years to set themselves up to have none but inefficient vehicles in production. It was they who were bullying Congress into essentially non-existent mileage requirements. What did they expect? That they would not go bust the day energy prices were going up? Please. We have seen this before. History simply repeats itself.

[Alexandro]

too little and waaaaaaaaaaaaaay too late!

[jsarets]

There's a market in the U.S. for $25-30K compact hatchbacks if they get 45+ mpg, compliment digital lifestyles, and have space-saving features (such as rear bench that folds flat for hauling and slides back for leg room) that mitigate the smaller size. Compact cars don't have to be economy trims well-under $20K. High gas prices create new possibilities for a compact luxury segment where American automakers can compete favorably with the Asian makers. Think Mini Cooper.

[KillTheMessenger]

That could as well be a Prius. The problem is that $25-$30k are too much for most people who really need a car with better mileage. And those who can afford the Prius or Mini Cooper usually don't need it. They want it and they profit from buying these cars. But they don't desperately need them. Where is the 45mpg car for $12k for the masses?

[almoguy]

That car would be the Ford Escort. My wife and I are teachers and it was the only car we could afford. We bought two Escort wagons in an 18 year period and were ready to buy a third when Ford decided that there was no profit margin even though they were the best selling car in the world. The Escort got 35-40 mpg and cost about 12 K. The first one we owned lived to 208K miles and we sold it to a student who drove it another 4 years to 260K. Ford dumped them for SUVs.

[Poohnc]

That will be smart fortwo

[JScott]

So nowhere in there is the US getting a version of the Australian Ford Falcon, they gotta bring that here-and call it Galaxie.

[GerryS]

if this was GM, they'd call it a Nova-