More clouds gather over Ford

With sales of pickup trucks and sport utility vehicles plummeting in step with soaring gasoline prices, Ford Motor Co. said Friday that it would delay release of its much-anticipated new F-Series pickups and reduce production of larger vehicles. The company also said it did not expect to be profitable through 2009.

The news, the latest in a series of recent negative developments for the second-largest U.S. automaker, drove Ford stock down 44 cents, to $5.86, in early trading in New York, a 7 percent slide.

In addition, Dearborn, Mich.-based Ford said its auto financing unit, Ford Motor Credit, would lose money this year. That unit, which has been profitable for many years, is suffering because of declining values of used pickups and SUVs on the secondary market, as well as difficulties in accessing global debt markets because of the worldwide credit crunch. Last year, the lending division had a profit of $775 million, down from $1.28 billion in 2006. For the first quarter of this year, it reported net income of just $24 million.

The automaker said that it would cut production for the remainder of the year significantly — as much as 25 percent in the third quarter — and that the newly designed F-150 pickup, due to go on sale in early fall, would come to market two months later than planned.

Blaming gas prices topping $4 across the country, Ford Chief Executive Alan Mulally said he saw "industrywide auto sales slowing further and demand for large trucks and SUVs at one of the lowest levels in decades." He added that the company had taken "decisive action to respond to this accelerating shift in customer demand away from large trucks and SUVs to smaller cars and crossovers, and we will continue to act swiftly moving forward."

To that end, Ford said it would increase production of smaller vehicles, including the Ford Focus sedan and Ford Escape and Mercury Mariner small SUVs.

Ford also reversed a long-held decision not to sell European models in the U.S., saying it would begin production of its well-regarded European Ford Focus — a more refined, higher-end car than its North American counterpart — in 2010. Ford previously had announced plans to produce the new Fiesta, a European-styled car, in North America as well.

Ford's moves follow similar steps at Detroit rival General Motors Corp., which said this week that it had abandoned plans to redesign its largest SUVs, such as the Chevy Tahoe, a sign that it would consider abandoning that sector of the market.

Shares of GM fell 67 cents in early trading Friday, to $14.12, a 4.5 percent decline. Chrysler, owned by private equity outfit Cerberus, is not traded publicly.

GM, Ford and Chrysler have all taken steps in recent months to reduce shifts and idle factories. All three have seen their U.S. sales decline precipitously this year, down 16 percent for GM, 11 percent for Ford and 19 percent for Chrysler through May. Overall U.S. auto sales in 2008 are on pace to be the lowest in years.

But some automakers, such as Honda Motor Co., which has very few large vehicles and relies primarily on popular small sedans, have weathered soaring gas prices well. Honda's sales through May increased by nearly 5 percent from the first five months of 2007.

Last month, for the first time since the early 1990s, Ford's F-Series truck was dethroned as the top-selling vehicle in America. It slipped to fifth place, behind four gas-efficient sedans: the Honda Civic, Toyota Corolla, Toyota Camry and Honda Accord.

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