DETROIT -- Ford Motor Co. will likely boost its second-quarter North American vehicle production if a new round of consumer incentives sparks stronger-than-expected sales of new cars and trucks, an auto parts executive with close ties to the automaker said on Thursday.
Ford shares were hammered last month when bloated inventories of unsold vehicles led it to announce a 17 percent cut in North American production for the second quarter over the same period a year ago.
But Peter Pestillo, CEO of Visteon Corp., which was spun off from Ford in 2000 and remains its largest supplier, said the production cut may not last for long.
That would be good news for Ford shareholders, since U.S. automakers book profits on vehicles when they are shipped from their assembly plants, not when they are actually sold from dealership lots.
"I'm not convinced, with the incentives that are on today, that Ford will retain its intention to dramatically limit production in the second quarter," Pestillo told Wall Street analysts in a conference call.
He was referring to this month's sharp increase in incentives spending by the Big 3, led by expanded interest-free financing offers from GM as it struggles with its crosstown rivals to compete with Toyota Motor Corp. and Honda Motor Corp.
"The new round of incentives is welcome news," Pestillo said.
Ford indicated it was sticking to its production plans when it announced an unexpectedly strong first-quarter profit on Wednesday. And Pestillo, who spoke on a call to discuss Visteon's financial results, did not elaborate on any possible changes in output from the world's second-largest automaker.
But Bob Schnorbus, chief economist at J.D. Power and Associates, said on Thursday that incentives were indeed driving sales sharply higher so far this month.
He said U.S. sales during the first two weeks of April were "tracking close to year ago levels" when the seasonally adjusted annual selling rate for April came in at 17.2 million light cars and trucks.
That compares with a disappointing 15.5 million rate in February and just 16.2 million last month.
"We may not have seen the full effect of these incentives yet and we're anticipating that the second half of this month will be slightly better than the first half," Schnorbus said.
"The last time we saw incentives this good we had 18 million in sales, so there's still some upside potential here," he added, referring to a discount-driven spike in sales last December.
J.D. Power has direct and daily access to retail sales results at over 5,000 dealerships nationwide, giving it an open window on about 25 percent of the market.