Read the August issue of Fixed Ops Journal, the parts,
service and collision magazine from Automotive News.

Mulally: Full speed toward smaller

Mulally: "You just cannot make cars that people don't want."
DETROIT — Ford Motor Co. is getting religion about American consumers' lack of appetite for trucks.

Ford CEO Alan Mulally now believes U.S. truck sales are in rapid and permanent decline. That means small and mid-sized vehicles — both cars and crossovers — ultimately will dominate the U.S. industry and Ford's lineup. Last week's sweeping production cuts torpedoed the automaker's long-promised plan to return to profitability in 2009.

"It appears to us that fuel prices are not going to come down," Mulally said last Thursday. "You just cannot make cars that people don't want."

The pullback came just four weeks after Ford announced a surprise $100 million first-quarter profit amid glowing media reports about the automaker's turnaround. But Ford soon found that consumers wanted dramatically fewer pickup trucks and SUVs as gasoline prices topped $3.50 a gallon.

Seismic shift
Ford says the rapid decline of pickup and SUV sales will make it miss it's profit forecast. Here are those vehicles' share of the U.S. retail vehicle market for 2007, last month and this month.
 20071st qtr. 2008AprilMay*
*First two weeks of May
Source: Ford Motor Co.

With customers turning away from the gas guzzlers, Ford is slashing production by 15 percent in the second quarter. Third-quarter production will plunge as much as 20 percent compared with 2007. Fourth-quarter production will drop as much as 8 percent. Pickup and SUV plants are taking the brunt of the cuts.

Indeed, the percentage of pickups and SUVs in Ford's 2008 production plan will be the lowest the company has seen since at least the 1980s when the original Taurus was hot, Ford sales analyst George Pipas told Automotive News.

Give Mulally credit for being the first from the Detroit 3 to step up and say loudly that the typical Detroit pattern is a path to oblivion. Ford also stepped away from the pack with a new sales forecast of U.S. light-vehicle sales of 14.7 million to 15.1 million units in 2008. That is one of the lowest projections in the industry.

Lowballing it
Ford's new 2008 light vehicle sales forecast is among the lowest in the industry. Here's a selection.
Ford Motor Co.14.7 million-15.1 million
J.D. Power14.9 million
IRN Inc.15.0 million
Global Insight14.8 million
General Motors15.2 million-15.5 million
Chrysler15.0 million-15.5 million
ToyotaLow 15 million range
Nissan15.2 million
HondaMore than 15.0 million
Hyundai15.0 million or less

But don't drown Ford with applause. The situation remains dire:

-- Ford can't predict when it might make money, Mulally said. He promised more guidance in late July after further number crunching.

-- More job cuts are planned by Aug. 1. Reductions will affect both hourly and salaried workers, and executives don't rule out firings and additional plant closings. J.P. Morgan analyst Himanshu Patel estimates Ford could lay off as many as 9,000 additional employees.

-- The small and mid-sized vehicles Mulally is counting on to rebalance Ford's product lineup aren't scheduled to arrive in the U.S. market until 2010 and later. 

You can reach Amy Wilson at

ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.