CHICAGO (AFP) — Ford Motor Company on Thursday said it is cutting production of large trucks and sport utility vehicles as soaring pump prices drive US demand for more fuel-efficient cars.
The second-largest US automaker also said it not longer anticipates returning to profitability next year.
Ford said it lowered its near-term profit outlook for North America "to respond to the rapidly changing business environment in the US" amid the worst housing crisis in decades and surging commodity prices.
"Unless there is a fairly rapid turnaround in US business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal," Ford president and chief executive Alan Mulally said in a statement.
"Overall, we expect to be about break-even companywide in 2009 -- with continued strong results in Europe and South America," Mulally said.
The struggling automaker said it is on track to cut its North American operating costs by about five billion dollars annually by the end of 2008.
Ford has been wrestling with a vast restructuring and cost-cutting program since 2006, when it had a record annual net loss of 12.6 billion dollars.
In April it posted a first-quarter profit of 100 million dollars in a surprise turnaround from a 2007 net loss of 2.7 billion dollars.
Ford said that this year's production of large trucks and sport utility vehicles (SUVs) will be reduced from a year ago "as gas prices soar and customers move more quickly to smaller and more fuel-efficient cars and crossovers."
The product mix shift toward higher production of cars and crossovers -- lighter SUVs built on platforms of cars instead of trucks -- will occur in the second half of 2008, the Dearborn, Michigan-based automaker said.
Ford said it now plans to produce 690,000 vehicles in North America during the second quarter, down 20,000 from its prior production outlook and 15 percent below its year-ago level.
The company plans to reduce third-quarter production by 15-20 percent from a year earlier, and fourth-quarter output by 2.0 to 8.0 percent.
"Rapidly rising commodity prices -- particularly steel prices -- and higher gasoline prices that are accelerating consumers' shift away from large trucks and SUVs together are having a tremendous impact on our sales, our manufacturing operations and our profitability as we look to 2009," said Mark Fields, Ford's president of The Americas.
Standard & Poor's Ratings Services revised its outlook on Ford to negative from stable, citing "heightened concerns about industry challenges in North America" after Ford said it no longer expects to return the automotive business to profitability by 2009.
Shares in Ford skidded 8.2 percent to close at 7.16 dollars in New York.
Separately, Ford said that its board of directors is "neutral" with respect to a tender offer from Tracinda Corp., the personal holding company of billionaire tycoon Kirk Kerkorian.
Kerkorian, who made a fortune from running and selling Las Vegas casinos, and has held big stakes in General Motors and Chrysler, stepped back into the US auto industry on April 2 with an initial investment in Ford.
On April 28 Tracinda bid 8.50 dollars per share for 20 million common shares of the automaker, representing a 38.7 percent premium to the stock's April 2 price. The offer will expire on June 9.
Kerkorian has failed in bids to acquire Chrysler and steer General Motors Corp. into an alliance with Renault-Nissan.
Analysts say the Ford family's major stake in the company will limit Kerkorian's power to force change.
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