Ford Foresees a Scale Back in '07 Production

Ford Motor Co. will build lesser cars and vehicles next year as it decreases sales to rental companies. Moreover, the decrease in the 2007 production, according to several auto analysts, is significantly attributed to the decrease of Ford customers.

The North American vehicle production will be down by 8 to 12 percent in the first six months of 2007. However, it will increase its production by 5-10 percent in the second half of the year. The decline in production is brought about by lesser demand for Ford products. It can be recalled that the automaker made a historic production cut of 21 percent this year. It resulted to several plant closures and layoffs.

Earlier, Ford reported a $5.8 billion loss caused by the sagging North American sales and huge expenses of the automaker's restructuring plans, which include the Bold Moves and the Way Forward. So far, the reported figure is the largest loss of the automaker in the past 14 years.

The estimate by Chief Financial Officer Don Leclair was confirmed by Oscar Suris, Ford's spokesman. Nevertheless, Suris did not give any production numbers for the first and second half of the '07 vehicle production to offer comparison. Suris further said that Ford is not making an official announcement of its production forecast. In addition, critics in the automotive world say that the expected rebound in production in the second half of '07 production is quite deceiving.

David Healy, an automotive analyst with Burnham Securities, estimates that the automaker will scale back North American production by 9 percent in 2007. This estimate is in comparison with last year's volumes. Further, Healy also said that the report of the rise in production in the second half of 2007 is a misleading improvement because of the continuing production cuts.

Healy expects that most of the production cuts will be for Ford's Taurus and Freestyle. These models are heavily sold to rental car companies. Ford Taurus, a midsize front wheel drive car was introduced in 1985. Ford Taurus car parts are designed to produce an influential car. Unfortunately, Taurus lost its best-seller status two years after its introduction. Freestyle, on one hand, is a crossover SUV that was introduced in 2005 to compete with midsize rivals like Toyota highlander, Nissan Murano, and Honda Pilot.

"A smaller portion of the production cut would be necessary because of erosion in the retail market, which includes sales to customers at dealerships but excludes discounted fleet sales to rental companies and government," Healy concludes.