Ford Motor Co. slashed 178,911 vehicles from its second-quarter production schedule, suggesting sluggish March sales, swelling dealer inventories and waning demand.
Last week, Ford said it plans to produce 980,000 cars and trucks during April, May and June, down 15.4 percent from the year-ago production of 1.159 million vehicles. Ford didn't disclose which vehicles or plants will be affected, but Ford sales analyst George Pipas said most of the reduction will be in cars.
"We still see demand being skewed toward light-truck production, and that's where we expect incentives to be focused, on the most profitable segments of the market," Pipas said.
Ford isn't the only automaker slashing production plans for the second quarter, as the United States faces more economic uncertainty, faltering consumer confidence and the threat of war in Iraq.
Industry production throughout North America is expected to decline 9.3 percent during that period to 4.147 million vehicles, according to the Automotive News Data Center and J.D. Power and Associates.
Ford's planned drop is the sharpest of the high-volume automakers.
Ford's Pipas said his company lowered its production plans more deeply than first planned after determining slow February sales weren't due to just bad weather.
Other reasons for trimming the second-quarter output included discontinued models, a shift cut, assembly line slowdowns, the June production launch for the redesigned F-150 and a tough comparison against the 2002 second quarter, which saw the industry pump up production to restore depleted inventory.
Visteon Corp., Ford's biggest supplier, had planned Ford production of 1.015 million vehicles in the second quarter, and the lower number has the supplier eliminating hourly production overtime and continuing to pursue other cost-cutting, spokesman Greg Gardner said.
Visteon has terminated about 270 salaried employees and contract workers at U.S. plants in the past two weeks.
Ford's production cut likely will trigger even more job cuts. Deutsche Bank analyst Rod Lache estimated Ford inventory would drop to 77 days supply by the end of June, assuming a 16.2 million light-vehicle selling rate for 2003.
The supply at the beginning of March was 83 days.
Merrill Lynch analyst John Casesa cut Ford's second-quarter and full-year earnings estimates upon the production news.
He also warned of earnings risks for suppliers with large exposure to Ford, including Visteon, Lear Corp., BorgWarner Inc., Magna International Inc. and Dana Corp.
Staff Reporter Julie Cantwell contributed to this report