Ford cuts production, moves back profit goal

General Motors Corp. cut its forecast for U.S. sales last month and has said it would cut second-quarter production in North America by 5 percent. But GM is under less pressure to make further cuts because of a nearly three-month strike at supplier American Axle and Manufacturing Holdings Inc., which affected more than 30 GM plants and cost the automaker more than 100,000 vehicles, mostly trucks and SUVs. GM spokesman Chris Lee wouldn’t say whether GM plans additional cuts.

Chrysler LLC quietly cut North American production by 16 percent in the first four months of this year, but won’t say how much more it might cut, spokesman Ed Saenz said. Toyota Motor Corp. and Nissan Motor Co. said they also have cut North American production to meet lower demand.

Bruce Clark, an auto analyst with Moody’s Investors Service, affirmed Ford’s credit ratings and said the automaker is in the best position of any U.S. automaker to weather the storm because of its gross liquidity, which stood at $40.6 billion as of March 31.

Clark said the greatest challenge for Ford will be maintaining its U.S. market share at 14 percent, successfully launching new cars and crossovers and making those smaller vehicles more profitable.

“Absent evidence of steady progress in these areas, Ford’s rating could come under pressure later in 2008,” Clark said.

Ford said it will increase production of cars and crossovers through additional shifts and overtime.

As recently as 2004, trucks and SUVs accounted for 70 percent of Ford’s sales volume, according to George Pipas, Ford’s top U.S. sales analyst. That has reversed completely: Retail sales of trucks and SUVs accounted for just over 30 percent of sales in April, he said. Ford’s smallest offering, the Focus sedan, saw sales jump 29 percent in the first four months of this year.

But Ford remains heavily reliant on the kinds of large vehicles that have been struggling in the current market. Ford’s F-series trucks, long the best-selling vehicles in the U.S., were down 16 percent through April. Sales of the Ford Expedition, the brand’s largest SUV, fell 27 percent.

Still, Mulally said the company is not considering dropping any trucks or large SUVs from its lineup. Instead, it is working on improving fuel economy.

“There’s always going to be a market for the truck-based platforms for their capability to tow and haul,” Mulally said.

Ford also plans to accelerate the North American introduction of some of its small cars from Europe and South America. Mulally gave no details on what vehicles might come to the U.S., but did say Ford can’t get the subcompact Ford Fiesta to the U.S. any faster than 2010. That puts Ford at a disadvantage to Toyota, Honda Motor Co. and others with subcompacts, which saw sales shoot up 33 percent through April.

“We’re also really trying to understand what the real demand is going to be from this point forward,” Mulally said.

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