DETROIT -- General Motors and Ford Motor Co. are making major cuts in their first quarter 2008 production forecasts for North America -- GM by 11 percent and Ford by 7.4 percent.
GM said Monday it would produce 950,000 vehicles (344,000 cars and 606,000 trucks) in North America during the first quarter. That's a reduction of 113,000 vehicles or 11 percent from the first quarter of 2007.
"We don't want to bury our dealers in inventory," GM sales chief Mark LaNeve told analysts. "We want to try to continue to run leaner on inventory."
Ford said it would cut first-quarter production by 7.4 percent.
The automaker plans to produce 685,000 vehicles in North America during the first three months of 2008, down 55,000 units from the first quarter of 2007. The cut shows Fords reluctance to build vehicle inventories as concern grows about U.S. demand in 2008.
Ford sales analyst George Pipas said car production would be cut 6 percent and truck production 8 percent in the quarter.
Earlier Monday, Ford CEO Alan Mulally told reporters that Ford plans to track the U.S. market closely and adjust its business plan as necessary.
Clearly with the economy and the subprime credit and housing being down, we continue to watch that very carefully as we move into 2008, Mulally said. Of course, the most important thing we can do is adjust our production to the real demand, which weve done very carefully and very decisively during this last year.
Ford cut 2007 production by 8.8 percent through September to 2.06 million cars and trucks. The company plans to build an additional 645,000 vehicles during the fourth quarter of this year.
That fourth-quarter plan represents a significant increase from actual production of 564,962 units during the same period last year. Ford began to cut back production drastically during the fourth quarter of 2006.
CSM Worldwide analyst Michael Robinet said the cutbacks announced by both Ford and GM showed that U.S. automakers were taking advantage of new flexibility in their just-completed labor pact to idle capacity in the face of slack demand.
"They're coming to terms with the real economics of the industry," he said. "No longer is Detroit just out to move the metal."
Reuters contributed to this report