In the light of current events such as rising gas and commodity prices, auto maker Ford Motor Co. is about to take drastic actions to combat these issues.
One of these drastic steps would be their recently announced production cuts. The company said that it was dropping their production in the second quarter by 15% compared to a year ago dropping its vehicle production to 690,000 units. The company also stated that it plans to produce 540,000 units in the third quarter before slightly increasing its production to around 590,000-630,000 units for the fourth quarter depending on consumer demand.
According to CEO Allan Mulally, "The challenge affecting the entire industry is the accelerating shift of consumer demand away from large trucks and SUVs to smaller cars and crossovers - combined with a steep rise in commodity prices along with a weak U.S. economy."
Ford's best selling car for decades was the F-Series pickup truck. The rapid decrease in demand for larger vehicles will no doubt have a huge impact on Ford's revenues.
Although Ford did record first quarter profits, the company is still backtracking on its 2009 profitability outlook. At the moment, Ford Motor Co. is still gathering data to assess exactly where U.S. market trends are heading. With rising gas prices pushing the demand shift to more economical cars, Alan Mulally said in a company statement "Unless there is a fairly rapid turnaround in U.S. 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."
The company's new light-vehicle sales forecast was trimmed from a sales range of around 15.0 Million to 15.3 Million just last April to a range of 14.7 Million to 15.1 Million.
The biggest hit however will still be Ford's lineup of pickup trucks and SUVs now that gas prices are bordering on $4.00 per gallon.
Decreased sales projection and production cuts, however, are also warning signs of even worse news: job cuts. The company will release specific details by July 2008.
One of these drastic steps would be their recently announced production cuts. The company said that it was dropping their production in the second quarter by 15% compared to a year ago dropping its vehicle production to 690,000 units. The company also stated that it plans to produce 540,000 units in the third quarter before slightly increasing its production to around 590,000-630,000 units for the fourth quarter depending on consumer demand.
According to CEO Allan Mulally, "The challenge affecting the entire industry is the accelerating shift of consumer demand away from large trucks and SUVs to smaller cars and crossovers - combined with a steep rise in commodity prices along with a weak U.S. economy."
Ford's best selling car for decades was the F-Series pickup truck. The rapid decrease in demand for larger vehicles will no doubt have a huge impact on Ford's revenues.
Although Ford did record first quarter profits, the company is still backtracking on its 2009 profitability outlook. At the moment, Ford Motor Co. is still gathering data to assess exactly where U.S. market trends are heading. With rising gas prices pushing the demand shift to more economical cars, Alan Mulally said in a company statement "Unless there is a fairly rapid turnaround in U.S. 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."
The company's new light-vehicle sales forecast was trimmed from a sales range of around 15.0 Million to 15.3 Million just last April to a range of 14.7 Million to 15.1 Million.
The biggest hit however will still be Ford's lineup of pickup trucks and SUVs now that gas prices are bordering on $4.00 per gallon.
Decreased sales projection and production cuts, however, are also warning signs of even worse news: job cuts. The company will release specific details by July 2008.
Ford's production will also be altered. The company is going to favor the production of its of lighter vehicles such as its compact car and crossover line-up to cater to the growing demand for better fuel economy.
As it stands, Ford's current course of action may just be the start of the company's makeover. Known for its big, powerful and sporty trucks, the company is seemengly headed towards 'the small car, eco friendly' approach as it tries to compete for a market that now favors practicality more than anything else.
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