Mumbai: Ford Motor Company has restored to cost cutting measures by scaling production of pickup trucks and sports utility vehicles amid soaring oil prices and falling sales, the company announced today. The automaker is also planning to introduce more eco-friendly vehicles to cater to the demands of the US customers with a complete shift in its production lineup.

Rising commodity prices such as steel, combined with increasing oil rates have reduced consumer demand for larger trucks and SUVs, resulting in dip in sales in the segment. This has forced the Ford to continue executing its transformation plan by aggressively restructuring to operate profitably at the current demand and changing model mix and also accelerating development of new products that customers demand.

The company is also looking ahead at a long-term profitable growth plan by introducing more small cars and crossovers for the North American markets, which the company profitably sells today in Europe and South America.

Ford stated that the 2008 US industry volume, including medium and heavy trucks, is expected to be between 15 million and 15.4 million units of which Ford, Lincoln and Mercury combined is expected to  account for14 per cent of the share, thanks to the introduction of several new products.

The production lineup for the 2008 North American market includes smaller and more fuel-efficient cars and crossovers such as the hot-selling Ford Focus, Fusion, Edge and Escape, Mercury Milan and Mariner, as well as the Lincoln MKZ and Lincoln MKX.

The  recently introduced the 2009 Ford Escape and Mercury Mariner small utility vehicles have new 4- and 6-cylinder engines with 11 and 20 per cent more horsepower, respectively, and 5 percent better fuel economy, thanks to new engine technology, aerodynamic improvements and new six-speed transmissions.  In fact, Ford now offers more vehicles with fuel-saving six-speeds than any other automaker.

Ford  plans to make 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 per cent from the second quarter of 2007.  The company plans to produce between 510,000 and 540,000 units in the third quarter, 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 company expects to achieve the production target  through overtime and added shifts at Ford's smaller car and crossover assembly plants during the second-half of 2008. Large truck and SUV production in the second half will be lower compared to the previous year, with reductions achieved through a combination of additional downtime, shift reductions and line-speed actions

''We are continuing to make great progress on our plan,'' said Ford president and CEO Alan Mulally.  ''We are profitable and growing outside of North America, and our transformation plan in North America is working.  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 US economy.''

By the end of 2010, 100 per cent of the product lineup will be new, including the next-generation Mustang to be introduced in 2009, along with the new fuel-saving EcoBoost engines and the new European-engineered Transit Connect. The all-new Ford Fiesta small car will hit the market  in 2010 – as well as several other vehicles not yet announced.

Ford remains on track to reduce by $5 billion its annual North American Automotive operating costs by the end of 2008 – at constant volume, mix, and exchange and excluding special items – compared with 2005.  However, further cost reductions and recognition of anticipated retiree health care savings from Ford's recent UAW labor agreement will be needed to offset higher commodity costs.  Ford had previously anticipated that ongoing retiree health care savings in 2008 would allow it to exceed the $5 billion target. 

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