DETROIT (Reuters) -- Ford Motor Co. will have to do more cost-cutting next year to offset the higher costs of new models, Ford Vice Chairman Allan Gilmour told analysts on Wednesday.
The world's second-largest automaker had already been forced to raise its cost-cutting target for this year to $2.5 billion just to hit its earnings estimate of 70 cents a share, or roughly $1.3 billion. Through June, Ford had cut $1.9 billion, mostly through reducing the cost of building current models and lowering its estimates for future warranty repairs.
Gilmour noted that Ford had announced a plan last month to cut 10 percent of its salaried job costs, including an unspecified number of white-collar job cuts.
"It is clear we will have to take further cost actions," Gilmour told the JPMorgan/Harbour automotive conference. "We are not done."
The cost cuts have been used to offset the continuing growth of rebates, cheap loan deals and other incentives to prop up sales, as well as the higher costs of building new models such as the F-150 pickup.
Gilmour said while the cost increase of new models in 2004 -- such as the Ford Freestyle wagon and Ford Five Hundred sedan -- would not be as severe as the $1,000 to $2,000 per vehicle of the F-150, he could not say when Ford's new models would cost less to build than their predecessors, a key requirement for profits in a deflationary U.S. auto market.
"We're looking at each product program we approve to say no cost increase," Gilmour said. "The objective has to be that the new product being introduced has no more cost than the old one."
Gilmour also said Ford was disappointed with its July U.S. sales. Ford's domestic brands were down 11.5 percent from July 2002; its market share was down 1.4 percentage points, and it was outsold in passenger cars by Chevrolet, Toyota and Honda.
Ford's incentives averaged $3,687 per vehicle in July, nearly 6 percent higher than June, but still less than General Motors and DaimlerChrysler AG's Chrysler arm. On Tuesday, Ford sweetened its offers on five Ford models.
"It's safe to say at the end of the month we weren't as competitive as we had planned to be," Gilmour said. "It was a tough month in market share and one that we're paying careful attention to."
Gilmour also said the company's pension plans had "double-digit" returns in the first half of the year. He said Ford would contribute $700 million to its foreign pension funds in the second half of this year, after adding $1 billion to its U.S. pension plans earlier this year.