Ford Delays 2009 F-Series Launch; 2008 Losses Mount
June 20, 2008
By Michelle Krebs
DEARBORN, Mich. -- Ford announced Friday morning that it will delay the爄ntroduction of its redesigned 2009 Ford F-150,爐he automaker's bread-and-butter vehicle,燽ecause of weakening vehicle sales that have taken a tremendous toll on large pickup truck sales.
In addition, Ford said it would cut production through year-end by 90,000 vehicles, mostly trucks and SUVs. It will boost production of small cars, crossovers and fuel-efficient powertrains. Ford also announced future plans to bring small cars in from Europe.
The bottomline is that Ford's financial performance for 2008 will be worse than the automaker had forecasted.
Deteriorating Auto Industry
Ford lowered its forecast for U.S. industry vehicle sales this year. Including medium and heavy vehicles, Ford predicts 2008 industry sales will be between 14.7 million and 15.2 million units. Its previous forecast had industry sales at 15 million to 15.4 million units.
"As gasoline prices average more than $4 a gallon and consumers worry about the weak U.S. economy, we see June industrywide 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 in the company's statement.
Fewer Trucks, SUVs and Full-Size Sedans
As a result, Ford said it will reduce production by 90,000 units from its previous production schedule for the rest of the year.
With a possible hint that Ford is prepared to cut more if the market conditions worsen even further, Mulally said in Friday's press statement: "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 plans to produce 475,000 vehicles in the third quarter. That's 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.
Production reductions will be achieved through additional downtime, shift reductions and slowing line speeds at Ford assembly plants that make large trucks, SUVs and full-size cars.
Here's Ford's latest game plan:
路 Production of the 2009 F-150 now will begin in August at plants in Kansas City and Dearborn, Michigan. 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.
路 As previously announced, Michigan Truck Plant, which assembles the Ford Expedition and Lincoln Navigator, will be idled for nine weeks beginning the week of June 23.
路 One shift will be eliminated at Louisville, Kentucky, assembly plant for the Ford Explorer and Mercury Mountaineer SUVs.
路 The line speed will be reduced at Kentucky plant for large pickups. Ford already has announced the Super-Duty line will be down an extra two weeks for summer vacation, idling it for a full month.
路 Production will wind down at the 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.
路 The line speed will be reduced at the Chicago assembly that makes the Ford Taurus and Mercury Sable.
More Small Cars, Crossovers
At the same time, Ford will boost the production of its Ford Focus, Escape and Edge as well as the Mercury Mariner and Lincoln MKX.
Ford will add a third shift at its Oakville, Ontario, plant, which produces the Edge, MKX and the upcoming Ford Flex. The Kansas City plant that produces the Escape and Mariner as well as their hybrid versions also adds a third shift. At the Wayne, Michigan, plant that makes the hot-selling Focus, a third shift will be added in the body and paint shops and the assembly line speed will be cranked up.
More Cars From Europe Coming
Ford further announced that the next-generation European Ford Focus will be sold in North America. Enthusiasts likely are cheering that decision, saying it is about time. Industry observers and driving enthusiasts have long questioned why Ford makes one Focus for North America and another -- a better one -- in Europe.
The Euro Focus joins the Ford Fiesta, a B-segment car based on the Ford Verve concept, in the automaker's portfolio for 2010.
Ford confirmed it is revising its product plan to add more small cars, crossovers and fuel-efficient powertrains, including many from Ford's acclaimed European lineup.
F-150 Delay
Instead of the redesigned F-150 going on sale at the traditional start of the new model year, it will go on sale in late fall, Ford said. Ford dealers are buried in inventory of the current version. Ford said the extra time would allow them to sell down inventories before bringing on the new one.
"Our plan all along has been to introduce the new F-150 after our dealers had a chance to sell down inventory of the existing model," Mark Fields, Ford President of The Americas, said in a press statement Friday. "And -- with the current slowdown in the marketplace -- we decided it was prudent to adjust the start of public sale for the new truck by about two months."
F-Series sales were off a whopping 31 percent in May, pushing them down 19 percent for the calendar year to date. Perennially America's best-selling vehicle, the F-Series was displaced in May by the Honda Civic.
Losses Bigger Than Expected
As a result of lower production prompted by the weak economy, Ford confirmed it will report a larger financial loss for 2008 than it had planned. Further, Ford Motor Credit, the company's financial arm that has been consistently profitable, will also lose money.
Ford has lost $15.3 billion in the past two years. Under the leadership of Mulally, the automaker had expected to turn a profit in 2009. But Mulally has said the economy has stalled the automaker's turnaround and even breaking even will be difficult in 2009.
In its press statement Friday, 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." The statement said Ford's North American operations expected annual operating costs to be $5 billion lower by the end of 2008 compared with 2005.
Photo by Ford
1 - 2009 Ford F-150
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