Ford Cuts North American Production

DETROIT (AP) - Ford Motor Co. is cutting North American
production of pickups and SUVs as car buyers eyeing record gas
prices turn toward more fuel-efficient models. The automaker says
it no longer expects to return to profitability by 2009.

Dearborn-based Ford also on Thursday cut back its projections
for total U.S. sales in 2008 to between 15 million and 15.4 million
vehicles. That's down from 17 million vehicles as recently as 2005.

"Unless there is a fairly rapid turnaround in U.S. 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.

Its shares sank 59 cents, or 7.6 percent, to $7.21 in morning
trading.

Ford said it will cut production by 15 percent in the second
quarter, 15 to 20 percent in the third quarter and 2 to 8 percent
in the fourth quarter. The cuts will primarily affect pickups and
sport utility vehicles, which have seen sales plummet in recent
months due to rising gas prices and the slowdown in new home
construction.

Ford plans to increase its production of cars and crossovers
through additional shifts and overtime. Ford's smallest offering,
the Focus sedan, saw sales jump 29 percent in the first four months
of this year, while its Ford Edge crossover was up 38 percent.

But the company's mix of vehicles remains heavily tilted to
trucks and SUVs. Ford's F-series trucks, long the best-selling
vehicles in the U.S., were down 16 percent in the same period.

Ford said in addition to realigning its manufacturing capacity
to produce more small cars and crossovers, it plans to accelerate
the North American introduction of some of its small cars from
Europe and South America.

Ford had said in March it planned to cut second-quarter
production by 10 percent and confirmed additional cuts at a factory
in Michigan earlier this week. But it revealed the full extent of
the cuts Thursday.

Production cuts hurt revenues, because automakers book vehicles
as sold once they leave the factory.

Consumers have been shifting to smaller, more fuel efficient
cars in the last few months at a pace that stunned the industry.
Through April, U.S. sales of subcompact cars shot up 33 percent,
while sales of large SUVs were down 29 percent, according to
Autodata Inc. Overall U.S. sales were down 8 percent in that
period.

Ford said it is on track to reduce North American automotive
operating costs by $5 billion by the end of this year. But it said
the rising price of steel and other commodities are offsetting
expected gains from its new contract with the United Auto Workers.


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