Ford cuts truck production by 25 per cent as fuel prices pull down sales

21 June 2008

Hit by deepening slump in US sales, Ford Motor Co yesterday announced that it would cut third quarter production of big trucks and gazz guzzling SUVs in response to consumer preference shifting to more fuel efficient cars and crossover vehicles as fuel prices come close to $4 per gallon.

It plans to cut production by 50,000 to 4,75,000 in the third quarter - a 25 per cent fall in production compared with last year - and a further by 14 per cent cut in the following quarter.

It will also delay launching a new version of its F-150 pickup truck, its best-selling vehicle and the most profitable, by two months due to the industry-wide slowdown in the US truck market and the need to sell down dealer inventory of the current model. 

"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, 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," said Mark Fields, Ford's president of The Americas. 

Ford's announcement was madea a day after General Motors Corp. said it was stopping the development of its next-generation pickup trucks and sport utility vehicles due to soaring gasoline prices.

Ford also said that its financial performance for 2008 would be worse than 2007 when it reported a loss of $2.7 billion (down from $12.6 billion in 2006)  and said that it would struggle to break even on an operating basis in 2009. "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 compay said in a statement.