Reply #5: Ford's trouble: $4 gas is here to stay [View All]

[ozymandius]

NEW YORK (CNNMoney.com) -- Ford Motor Co. executives say they believe that $4 gas is here to stay, resulting in a fundamental consumer shift away from gas-guzzling SUVs and pickups and causing continued losses at its core North American auto unit.

The company said it expects gas prices to remain in the range of $3.75 to $4.25 a gallon through the end of 2009. And that expectation prompted the nation's No. 3 automaker to announce deep production cuts for what has been its best selling and most profitable vehicles for several decades and could lead to more plant closings and job cuts down the road.

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Ford now believes that the change in vehicle choice is structural, not cyclical, Mulally said. Ford reduced its forecast for industrywide sales and said its own market share will now be about 14% of retail sales, at the low end of its earlier forecast.

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Mulally said the company in July will detail longer-term changes, including personnel reductions. Ford had already offered buyouts and early retirement to all of its U.S. hourly employees earlier this year. But that was done not so much to cut headcount but to replace high-paid senior employees with costly benefit packages with lower-paid new hires with less expensive heath and retirement plans. There are also targeted buyout offers at two plants slated for closure.

Ford said it will ramp up production of some other models such as cars and so called crossovers, a vehicle designed to bring a more car-like ride to SUVs. But the cuts in its pickup and SUV output will be greater than its increased car production.

http://money.cnn.com/2008/05/22/news/companies/ford/index.htm?postversion=2008052211