Ford Motor Company on Thursday said it is cutting production of large trucks and sport utility vehicles as soaring pump prices drive US demand for more fuel-efficient cars.
The second-largest US automaker also said it no longer anticipates returning to profitability next year.
Ford said it lowered its near-term profit outlook for North America “to respond to the rapidly changing business environment in the US” amid the worst housing crisis in decades and surging commodity prices.
“Unless there is a fairly rapid turnaround in US business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal,” Ford president and chief executive Alan Mulally said in a statement.
“Overall, we expect to be about break-even companywide in 2009 — with continued strong results in Europe and South America,” Mulally said.
The struggling automaker said it is on track to cut its North American operating costs by about US$5 billion annually by the end of this year.
Ford has been wrestling with a vast restructuring and cost-cutting program since 2006, when it had a record annual net loss of US$12.6 billion.
Last month it posted a first-quarter profit of US$100 million in a surprise turnaround from a net loss of US$2.7 billion last year.
Ford said that this year’s production of large trucks and sport utility vehicles (SUVs) will be reduced from a year ago “as gas prices soar and customers move more quickly to smaller and more fuel-efficient cars and crossovers.”
The product mix shift toward higher production of cars and crossovers — lighter SUVs built on platforms of cars instead of trucks — will occur in the second half of this year, the Dearborn, Michigan-based automaker said.
Ford said it now plans to produce 690,000 vehicles in North America during the second quarter, down 20,000 from its prior production outlook and 15 percent below its year-ago level.
The company plans to reduce third-quarter production by 15 percent to 20 percent from a year earlier and fourth-quarter output by 2 percent to 8 percent.
“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,” said Mark Fields, Ford’s president of The Americas.
Standard & Poor’s Ratings Services revised its outlook on Ford to negative from stable, citing “heightened concerns about industry challenges in North America” after Ford said it no longer expects to return the automotive business to profitability by next year.
Shares in Ford skidded 8.2 percent to close at US$7.16 in New York.
Separately, Ford said that its board of directors is “neutral” with respect to a tender offer from Tracinda Corp, the personal holding company of billionaire tycoon Kirk Kerkorian.
On April 28, Tracinda bid US$8.50 per share for 20 million common shares of the automaker, representing a 38.7 percent premium to the stock’s April 2 price. The offer expires on June 9.