Ford's big cuts aim for a Honda-sized lineup

Ford is slashing production of the Expedition.
DETROIT — Ford Motor Co. is undergoing wrenching production changes — fewer trucks, a lot more cars — to become a little bit more like Honda.

Last week, Ford announced plans to slash truck production while boosting output of the Ford Focus and Fusion, and also the Mercury Milan.

Asked whether Ford's model mix should be more like that of Toyota and Honda, Ford CEO Alan Mulally said: "Absolutely. We just don't have enough of those small or medium-sized vehicles yet, and that's what we need to concentrate on."

With its fuel-efficient vehicle lineup — and with gasoline prices edging toward $4 a gallon — Honda brand last month overtook Ford to become America's No. 3 brand in retail sales. Through April, here's the new pecking order: Toyota, Chevrolet, Honda, Ford.

Retail sales do not include sales to corporate fleet customers like Wal-Mart, or daily rental fleets like Hertz. According to Ford analyst George Pipas, retail sales account for 65 percent of Ford brand's total sales.

If so, the Ford brand's retail sales through April were approximately 421,000 units. Honda brand — which says it doesn't sell vehicles to fleets — sold 437,102 cars and trucks.

Ford isn't about to abandon trucks — not with a redesigned F-150 appearing this fall. And the Ford brand still leads the Honda brand in overall sales. Through April, the Ford brand sold 647,140 cars and light trucks, compared with Honda's 437,102.

But Honda has sales momentum, while Ford is in turnaround mode.

Neck and neck
Through April, Honda division is ahead of the Ford brand in retail sales.
BrandJan.ľApril '08
Honda437,102
Ford421,000
Source: Retail sales estimates by Ford, Automotive News Data Center

Hot-selling cars

With hot sellers like the tiny Fit, the Civic Hybrid and a redesigned Accord, Honda brand total sales through April are up 3.6 percent, while overall industry sales are down 9.2 percent.

Honda avoided a sales slump in part because it doesn't sell gas-guzzling pickups and big SUVs, says Lonnie Miller, an analyst for R.L. Polk & Co., of suburban Detroit. "Honda is sitting pretty right now with the Fit, Civic Hybrid and redesigned CR-V," Miller said.

Polk's retail vehicle registration data for the first three months of the year — the most recent period available — supports Ford's retail sales estimates.

Through March, the Honda brand generated 306,261 retail sales, according to Polk data. The Ford brand generated 307,550 retail units, and Chevrolet had 336,056.

If trends continue, the Honda brand may move up to No. 2 as early as this year. Concludes Miller: "Chevrolet should worry."

Ford aims for a rebound as it introduces several vehicles.

Ford plans to sell the Flex crossover this summer. If the Flex catches on, it could add 40,000 units to Ford's total this year. Ford hopes to sell as many as 100,000 Flexes annually.

A revamped F-150 pickup is scheduled to arrive at dealerships in the fall, but Ford likely won't see any increase in sales because of high fuel prices. The F-150 could help slow Ford's dramatic decline in pickup sales, which are down 15 percent this year.

But Ford's turnaround will remain a work in progress, if production plans are any indication.

In the second quarter, Ford's overall production will decline 15 percent from the same period a year earlier. Overall production will drop as much as 20 percent in the third quarter and 8 percent in the fourth quarter.

Honda, for its part, will bring out a new version of the Fit in the fall. The rest of its lineup has been revamped. Honda spokesman Chuck Schifsky downplays the retail sales race with Ford and Chevrolet. If Honda is ahead of its rivals at year end, you won't see champagne corks popping. Says Schifsky: "It'll be business as usual."

You can reach Richard Truett at rtruett@crain.com

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