May 27, 2008
Ford’s future strategy is lower volumes and smaller cars
High fuel prices are not going away in the United States - or anywhere else for that matter - and Ford is finally realizing it can’t continue to sell as many pickup trucks and large SUVs as it has in the past. The first quarter’s unexpected $100 million profit notwithstanding, all the markers are pointing Ford toward a smaller future, both in terms of products and sales volume.
Cutting sales and production by 15% in the second quarter and by as much as 20% in the third quarter of 2008 means Ford will see far fewer vehicles built this year, especially on its light truck assembly lines, where total volume will drop to levels not experienced since the Taurus sedan’s strong success in the 1980s, reports Automotive News.
Chrysler has already figured out a similar route to what it hopes will be a profitable future with its project Genesis and related initiatives.
General Motors, just coming off of a strike that costs nearly 300,000 units of production and $2.8 billion in sales hasn’t announced similar plans, but the strike has operated as a sort of de facto production cut, so it may not need to take separate action for the immediate future.
Ford’s production numbers and sales expectations are based on forecasts of total U.S. market sales of 14.7-15.1 million vehicles, which is on the lower side of the accepted range. General Motors and Chrysler are still expecting between 15.0 and 15.5 million in total sales, while industry analyst groups J.D. Power and Global Insight see the numbers more like Ford does, at 14.9 million and 14.8 million respectively.
Until Ford can get some more fuel-friendly vehicles on the road and find a way to turn around its plummeting sales, it looks like $100 million surprise profits are a thing of the past. Already the company is saying it will be slashing more jobs - as many as 9,000 - by August and the company can’t say when it will return to profitability. And the smaller, more efficient cars like the new global Focus that are hoped to turn things around? They aren’t due until 2010 at the earliest.