Ford cuts gas-guzzling SUVs

The Michican-based auto giant said it planned further manufacturing capacity realignments, additional cost reductions and changes to its product mix to respond to the rapidly changing business environment in the US. The company said it is increasing 2008 North American production of cars such as the Focus and reducing 2008 production of large trucks and SUVs, as fuel prices soar and customers move more quickly to smaller and more fuel-efficient cars and crossovers. Ford President and CEO Alan Mulally 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 US economy.” Ford said 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% from the second quarter of 2007. Mark Fields, Ford’s President of The Americas, said: “Rapidly rising commodity prices – particularly steel prices – and higher gasoline prices that are accelerating consumers’ shift away from large trucks and SUVs together are having a tremendous impact on our sales, our manufacturing operations and our profitability as we look to 2009.” Mulally said that unless there was a rapid turnaround in US business conditions, which he was not anticipating, it would take longer than expected to achieve profitability goals. “Overall, we expect to be about break-even companywide in 2009 – with continued strong results in Europe and South America,” he concluded. Cash outflows associated with operating losses and redundancies were now projected to be between $14 billion and $16 billion for 2007 to 2009.