Page last updated at 23:11 GMT, Friday, 20 June 2008 00:11 UK

Ford 'to make fewer big vehicles'

A Ford SUV
Ford will make 90,000 fewer vehicles this year

Car giant Ford has said it will cut its production of large trucks and large sports utility vehicles (SUVs) in favour of more fuel efficient models.

It will also delay the introduction of its new pick-up truck by two months.

The US economic slowdown has reduced sales and soaring fuel prices have put consumers off buying bigger vehicles.

Ford said it will make a loss this year and predicted that the worsening US economic situation would make it difficult for it to break even in 2009.

We view the move to smaller, more fuel-efficient vehicles as permanent
Ford president and chief executive Alan Mulally

"Demand for large trucks and SUVs [is] at one of the lowest levels in decades," said Ford president and chief executive Alan Mulally.

Ford's sales were down 16.8% last month compared to May 2007, according to industry analysts Autodata.

The company's new F-150 pick-up truck will now go on sale two months later than anticipated in the autumn of next year.

Ford said it expected to produce 90,000 fewer vehicles in the second half of 2008.

Production in the third quarter will now be 475,000 vehicles, 25% fewer than during the same period in 2007, Ford said.

'Responding to demand'

The company will increase the production of smaller vehicles including the Ford Focus sedan, the Ford Escape and the Mercury Mariner.

"We view the move to smaller, more fuel-efficient vehicles as permanent, and we are responding to customer demand," Mr Mulally said in a statement.

US VEHICLE SALES MAY 2008
Ford: down 15.8%
General Motors: down 27.5%
Chrysler: down 25.4%
Honda: up 15.6%
Nissan: up 8.4%
Source: Autodata

Most of the production cuts will be achieved by extending the summer shut-downs, reducing production line speeds and cutting the number of shifts at some plants. Shifts will be added at factories making the smaller vehicles.

Ford has said it wants to reduce its workforce by 12% and further cuts cannot be ruled out. The company will announce further details of its restructuring plan when it announces its next set of financial results in July.

As a result of Ford's announcement, Standard and Poor's said it was reviewing its ratings for major car producers including Ford, Chrysler and General Motors.

If it downgrades their investment ratings, their borrowing costs could increase.

Ford shares closed down 8.1% and General Motors fell 6.8%.

Earlier this month, General Motors said it was closing four SUV and truck factories in the US, Canada and Mexico in response to falling demand.




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