Ford: Misses Profit Target, Cuts its 2008 Production Schedule and Industry Sales Forecast
May 22, 2008
By Michelle Krebs
Ford said Thursday it likely will not hit its target to be profitable in 2009, but will just break
even, due to the deteriorating economy, soaring gas, steel and other commodity prices and a dramatically shifting consumer preference toward fuel-efficient cars and crossovers from more lucrative trucks and SUVs.
Ford, which lowered its forecast for 2008 industry sales, announced a major revision to its 2008 vehicle production schedule. The automaker will reduce the total number of vehicles it will produce for the rest of the year. It will increase production of, especially fuel-sippers like the Ford Focus, and decrease its production volume of trucks and SUVs.
Missing '09 Profit Target
Ford said it will miss its goal of being profitable in 2009, and likely will just break even.
"Unless there is a fairly rapid turnaround in U.S. business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal," said Ford CEO Alan Mulally in a statement issued by Ford Thursday morning. "Overall, we expect to be about break-even companywide in 2009 -- with continued strong results in Europe and South America."
Cut Sales Forecast, Production Schedule
Ford said it has reduced its previous forecast for industry sales in 2008. It now expects 2008 U.S. industry volume, including medium and heavy trucks, to be between 15 million and 15.4 million units.
To that end, Ford said it will cut its production schedule for the rest of 2008. 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 percent from the second quarter of 2007.
In the third quarter, Ford plans to produce between 510,000 and 540,000 units, down 15 to 20 percent from the same period last year.
Fourth-quarter production is expected to be between 590,000 and 630,000 units, down 2 to 8 percent from year-ago levels.
The second-half production plan includes higher car and crossover production compared with a year ago. Ford said higher production will be achieved through overtime and added shifts at Ford's smaller car and crossover assembly plants. Ford will increase production of the Ford Focus, Fusion, Edge and Escape, Mercury Milan and Mariner, as well as the Lincoln MKZ and Lincoln MKX.
Large truck and SUV production, lower than in last year's second half, will be accomplished through a combination of additional downtime, shift reductions and slower line speeds, Ford said.
"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 U.S. economy," said Mulally in the company's statement.
Important Product Launches
While its overall sales are dragged down by lower sales of trucks and SUVs, Ford has been enjoying success with its new products, notably the Ford Focus, Edge and Escape, which had shown signficant sales growth this year.
In addition, Ford is launching a number of important new models, more suited to the changing market tastes. The automaker has just introduced the revised 2009 Ford Escape and Mercury Mariner, which now have more powerful but more fuel-efficient engines and available six-speed transmissions. Ford soon begins production of the Ford Flex crossover and the Lincoln MKS sedan. New versions of the Ford Fusion, Mercury Milan and Lincoln MKX midsize sedans debut late this year with the Fusion and Milan offering hybrid versions.
However, the big question surrounds Ford's most important vehicle: the redesigned 2009 Ford F-150.
Posted by Michelle Krebs at 6:10 AM under Business , Featured , Ford , News | Comments (0) | digg this | Seed Newsvine
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