Ford delays its F-150, cuts production, sales forecast

By: JournalNow Staff | THE ASSOCIATED PRESS
Published: June 21, 2008

DETROIT

Faced with a continuing plunge in pickup and sport utility vehicle sales, Ford Motor Co. tried to deal with the mess yesterday by delaying production of the new F-150 pickup truck and announcing further factory cuts.

Shortly after Ford's announcement, Standard & Poor's Ratings Services said it is reviewing ratings on Ford, Chrysler LLC and General Motors Corp. with the possibility of lowering them because of the deteriorating U.S. auto market. Also, Moody's Investors Service changed its ratings assessment for Ford and Chrysler from stable to negative.

Lower credit ratings can boost a company's borrowing costs.

Ford also said yesterday that its loss on automotive operations will worsen in 2008 and that it will be difficult for the company to break even in 2009 as it had predicted just a month ago.

Ford's moves are the latest in a series from U.S. automakers as they struggle against an economic downturn and $4-a-gallon gasoline that has sent buyers fleeing from pickups and sport utility vehicles, their traditional moneymakers.

"It's a critically tough environment," said Efraim Levy, a senior industry analyst with Standard & Poor's. "It's almost like anything that can go wrong is going wrong."

Ford conceded in a statement that the U.S. market is declining this year, reducing its industrywide light-vehicle sales forecast. The company now predicts sales will not rise above 14.9 million and could go as low as 14.4 million, which would be the lowest level in 13 years, according to Ward's AutoInfoBank.

Just a month ago, Ford dropped its forecast to a range of 14.7 million to 15.1 million. The company's sales fell 16 percent in May.

Because of the crumbling sales, Ford said yesterday that it will cut third-quarter production by an additional 50,000 vehicles. It now plans to produce 475,000 vehicles, 25 percent fewer than the third quarter of last year.

The company also said that fourth-quarter production will drop by an additional 40,000 vehicles to a range of 550,000 to 590,000. That's on top of a previously announced 8 percent to 14 percent cut from the fourth quarter of last year.

Most of the production cuts will come from extending the normal two-week summer shutdown at pickup and SUV plants, as well as shift and assembly-line speed reductions, the company said in a statement.

Ford said it will now introduce the new F-150 model two months later than normal, in late fall instead of late summer.