Ford to cut output in '07

October 31, 2006|By Detroit Free Press

DETROIT -- Ford Motor Co. will build fewer cars and trucks next year as it reduces sales to rental companies and analysts expect consumers to keep buying fewer of the models that Ford sells.

Ford said yesterday that it would cut North American production of new cars and trucks by 8 percent to 12 percent in the first half of 2007, but increase production in the remainder of the year by 5 percent to 10 percent.

The news follows Ford's historic production cut of 21 percent in the last three months of this year, which has caused temporary plant layoffs in several states.

Ford spokesman Oscar Suris said he would not release detailed production forecasts for 2007, which might indicate how much car and truck sales would be reduced, because the company wasn't making an official announcement of its production forecast.

But the rebound in production during the latter part of 2007 might be deceiving.

Overall, David Healy, an automotive analyst with Burnham Securities, estimates that Ford will cut North American production 9 percent in 2007, compared with 2006. He called reports of a boost in production during the second half of 2007 "a misleading improvement" because of the continuing production cuts this year.

He also expected that most of the cutbacks would be for models such as the Ford Taurus and Ford Freestyle, which are heavily sold to rental car companies. A smaller portion of the production cut, he said, would be necessary because of erosion in the retail market.

Altogether, Ford's preliminary production guidance suggests the company expects its automotive sales to bottom out during the next year.

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