Ford Switching From Trucks To Small Cars

DEARBORN, Mich. (AP) -- Ford Motor Co. said Thursday it lost $8.67 billion in the second quarter and will retool two more North American truck and sport utility vehicle plants to build small, fuel-efficient vehicles.

The net loss includes $8.03 billion worth of write-offs because of a decline in value of North American assets and Ford Motor Credit Co.'s lease portfolio. Even excluding those items, Ford lost 62 cents per share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected a 27 cent loss per share.

Including the write-downs, Ford lost $3.88 per share in the April-June quarter, compared with net profit of $750 million, or 31 cents per share, in the same quarter a year ago.

Second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.

Ford also announced that it will bring six European small car models to North America by the end of 2012 as it deals with a market shift from trucks to cars brought on by high gasoline prices.

The company said it will retool the Michigan Truck plant in suburban Detroit, shifting its products from large SUVs to make global vehicles off the European Focus platform by 2010.

The SUVs made at Michigan Truck -- the Lincoln Navigator and Ford Expedition -- will be shifted to the Kentucky Truck plant in Louisville, which makes Ford Super Duty pickups.

The company also will retool the Louisville Assembly Plant, which now builds the Ford Explorer midsize SUV, to produce vehicles on the European Focus frame, starting in 2011.

The company had previously announced it would retool its pickup truck factory in Cuautitlan, Mexico, to build the Fiesta subcompact for North America starting in 2010.

Ford also said its Twin Cities Assembly Plant in St. Paul, Minn., will continue producing the Ranger small pickup through 2011. The plant was scheduled to close next year, but Ranger sales are down just 4 percent in the first half of this year, versus 18 percent for the U.S. light truck market as a whole.

The company said its write-offs included $5.3 billion in North America and $2.1 billion for Ford Credit's truck-heavy lease portfolio. Chief Financial Officer Don Leclair said most of the write-down was triggered by the drop in value of the company's truck and SUV inventory and lease residuals.

Ford reported a pretax loss of $1.3 billion in North America because of the deteriorating U.S. market and the shift away from trucks. U.S. sales overall were down 10 percent in the first half of the year, with Ford's sales down 14 percent.

The company, though, continued to be profitable overseas, posting a $582 million profit in Europe and $388 million in South America. The company also made $50 million at its Asia-Pacific-Africa division.

"The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term," President and CEO Alan Mulally said in a statement.

Ford said it does not expect a U.S. economic recovery to start until early 2010.

The company identified only three of the European small vehicles it will bring to North America: the Transit Connect small van, the European Focus and the subcompact Fiesta. Most will be built in North America, and Leclair said some might be exported. Ford already has announced that the Transit Connect will be imported from Turkey.

Ford said the other three vehicles would be identified later, including one that is unique within its segment.

Other possible vehicles are the Kuga small crossover, the C-Max small van and the Mondeo midsize car.

Ford also announced that the next-generation Ford Explorer midsize SUV will come out in 2010 and be built on car underpinnings, making it more fuel efficient than the current truck-based model. And it announced it will build a seven-passenger car-based crossover vehicle for Lincoln in mid-2009.

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Ford's retooling 7/24/2008 12:32:00 PM All of the retooling from trucks and large SUV's to small cars would seem to be a great idea until you realize that these Ford vehicles are not selling very well either. So can we expect to see the dealer inventory issues go from large trucks and SUV's to small cars that no body wants either with preference being for Toyota's Honda's, Nissan's, Hyundai, Mazda and Kia. When will Ford find it's "K-car" as Chrysler did and build on a success rather than continue to inundate the public with more of what it really doesn't want from Ford?
Ford's plans 7/24/2008 12:56:00 PM I applaud Ford's willingness to move towards more fuel efficient vehicles. However there is one glaring omission. No one makes a small fuel efficient pickup. In the 70'sand 80s we had VW pickups, Dodge Rampages, Subaru Brats, and Izuzu Pups. Even the Toyotas and Datsuns were small and efficient. Some even had small diesels and would get mileage in the 30's. Surely we could match this today. Americans love pickups we just can't afford to fuel them. So it seems logical to produce fuel efficient pickups. Where are the hybrid pickups? The light duty diesels? I know the bits are out there why don't manufacturers make them?
Lots of "re-engineering" needed 7/24/2008 1:06:00 PM It seems that Ford has been designing vehicles that are more difficult to service. I guess this is an effort to keep owner form servicing their own cars. Unfortunately, this also makes it more difficult for a garage or service department to work on. This translates into higher repair bills for the owner. Ford also forces you to buy a lot of crap on a car. Check their product line and look at the models for which an automatic transmission is a "must buy".
Ford's retooling 7/24/2008 1:14:00 PM Surprise, surprise! Instead of closing plants and laying off workers, perhaps Ford should look at executive staff responsible for strategic marketing. It is unthinkable that these executives could not see this coming. Ford is guilty of greed in the present and severe short-sightedness.
Passing on a great opportunity 7/24/2008 1:15:00 PM Instead of jumping to small cars Ford should make the Trucks and SUV's americans want fuel efficient. I know they think it is not possible, but they told Henry Ford that a V8 was impossible. Fortunes are made by companies that do the impossible!
Ford's retool 7/24/2008 1:16:00 PM I am surprised it took this long to realize that they have been building stuff we don't want. GM is in the same boat. When I hear these ads for vehicles with 300 Hp, I just roll my eyes and start more sketches for a home-built car that CAN do 100 mpg.
If no one wants them... 7/24/2008 1:40:00 PM Then why am I seeing the new '08 model Focus everywhere I go? Do you even know what the Focus looks like now? It's quite different than previously - maybe you're missing them, assuming they are an import.
retooling 7/24/2008 1:50:00 PM shut the door AFTER the horse gets out! all is well! FORD.
competition 7/24/2008 2:25:00 PM I am wondering why the big three are building more expensive fuel efficient cars than their competitive in small American companies, 300 mile a gallon car. If the big three can not make sheep fuel efficient cars, they will off of the market soon. All of other foreign cars will take their market in the coming few years.
Retooling 7/24/2008 4:28:00 PM I agree that the Big 3 are WAY too late in trying to get quality fuel efficient vehicles on the market. They are talking about 2012 for some of these vehicles. What are people going to between now and 2012? It's scary to think companies like GM have 10 assembly plants here in North America that are building nothing but full size trucks and SUVs. That means more cutbacks and layoffs.
Ford's Management is On Track 7/24/2008 4:43:00 PM Come on Guys Ford is working hard to get back on track. Did you think that gas would hover around $4.00 a gallon at this time last year? Probably not. This is the largest increase fuel cost in a 12 month period in our lifetime. There was not way the any auto maker could have designed that into their business plan three years ago. The average automobile cycle is 36 - 48 months for kick-off to job 1. A lot of people think that a product change can occur in a "few months" and that is not possible given the number of suppliers involved in the manufacture of a vehicle. Ford is doing an great job at trying to bring in a mix of vehicles that can save it's market share in a very short time. Ford / Mazda have powertrains that are very competitive and provide fuel economy that is as good as or better than the competition when vehicle size and weight. The vehicles that they want to bring in from other operations are selling well in their markets and are different than any vehicles that are currently offered in North America. Will they suceed in selling here will depend on whether the American buyer is willing to scale down in size. Remember that the American Consumer is what drove the North American automotive companies to make larger vechicles not the other way around. If the North American consumer wanted small fuel efficient vehicles in 2000 the automotive companies would have them on the road today. You need money and lots of it to design and build automotive products. Without the money the new products that everybody would like to see won't materialize. With the available cash I would say that Ford is doing a pretty good job delivering new products and ideas.
Ford Focus 7/24/2008 6:45:00 PM My wife bought an '08 Focus a couple of months ago. What a sweeheart of a car. This little sedan rides great, handles well and has more whistles and bells than I have seen on an economy car.It also averages around 30mpg in daily driving with an automatic. Toyota and Nissan has nothing on this car. Before I suggested the Focus to her, I did my homework. The newer Focus models havean excellent track record for owner satisfaction. If you are a Doupting Thomas, check JD Powers ratings on the car. Someone else commented on the styling of the '08 models. It looks a lot like one of the Infinity models to me.If Ford's new upcomming models are anything like this car, I am pretty sure they will rebound.
Ford Outlook 7/24/2008 7:12:00 PM This is fine, they realize what has happened and seem to have some idea what to do about it. But who can rationalize a plan with a horizon of four years. Ford like every other company in its league has to look around and see competitors make quick shifs (that they were prepared for) in response to the market conditions and then get prepared again for the next move. where is the long term planning you would expect Ford is paying dearly for?
Hybirds 7/25/2008 7:49:00 AM Let's face it I own a Mercury Mariner Hybird it get 30 to 32 miles a gallon for a small SUV but ford it's making a lot of these the cost of mine was around $32,000 list the battery costs to replace about $6800 and has a 100,000 mile built in service from Ford. I'm sure if they produce more of these the cost will drop. BUT FORD SIMPLY IN"T MAKING A LOT OF THESE>GO FIGURE
Re-tooling 7/25/2008 8:39:00 AM Ford & GM have been building small, fuel efficient cars for years, in Europe. Let's hope they can bring them here fast enough to bridge the gap until a North American formulation can be designed and produced. As far as management 'vision' gee whiz guys, they build what we want to buy; why didn't 'we' consumers see this gas price issue coming?? Perhaps we had our heads in the sand too. There is a lot of blame to go around. By the way, what happened to 'flexible manufacturing'; 'just in time' and all that? Guess it ain't as flexible as we had hoped. Let's go America, if we don't get our act together and stop pointing fingers, there won't be anything produced here except hamburgers.
Time to pay the Piper 7/25/2008 9:10:00 AM Like GM , Ford is paying the price of giving people what they want instead of what they need.The likes of Ford and GM have an inner mechanism in place that allows them to see the road ahead a little better than we can but they ignored the warning signs presented to them.
Ford small car direction 7/25/2008 12:24:00 PM I've been frustrated by Ford's great offerings offshore versus the domestics. I even saw a great Ford model in Mexico a year back. It's as if they were not serious about competing against the Honda/Toyota models in the US. Hoping for some great European Fords in the US.
Truck & SUV Fuel Efficiency 7/28/2008 12:19:00 PM Although they do not accelerate as quick as the gas V-8s, I think the US is ready for the high performance of light duty diesel engines capable of 35-50 mpg and in service in other countries. Tripling the mileage of my SUV would be very welcome.
easy to pick on Ford 7/28/2008 2:11:00 PM But the Euro models of high MPGs that our big 3 export have different EPA standards....wannah get pissed get pissed at the EPA we can have 30-50 mpg diesels if we did not have to have unreasonable NOx emissions and 15ppm ULSD fuel to contend with and the regen cycle that our Power Strokes go thru that lower mpgs every time they do a regen cycle....yeah the big 3 have earned a bit of our wrath but I submit that once again our UNelected Enviro-Nazi EPA Bureau precipitated this more then anything else.....when are we going to holler at teh gummet to git out of the enviro-correctness and start using good science. For those that live in the "my gummet does not wrong" world I beat many of you KNOW of real scientist that are silenced into submission, to keep from speaking out against false science......

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