Ford loss breaks record. More US fours on the way

Ford USA has posted a massive US$8.7 billion loss for the second quarter of the US fiscal year. The loss, which compares to a $750m profit for the same quarter last year, is the worst in the company's 105-year history.

While much of the loss (over US$7.0 billion!) was attributed to "write-offs associated with a decline in value of its North American assets and Ford Credit's lease portfolio" by observers like The Detroit News, poor sales of Ford's F-Series commercial vehicles and SUVs in the US market were also to blame.

In contrast, Ford of Europe posted a $US582m profit -- up US$320m on last year. Closer to home, in the Ford's Asia Pacific operation profits nearly doubled to around $50m and the sole remaining brand of Ford's once mighty Premium Auto Group, Swedish marque Volvo, reported a second-quarter loss of US$120 million -- US$29m more than the same period last year. Effectively offsetting this loss, Ford earned US$103 million from its controlling interest in Mazda -- up from US$72 million last year.

In declaring the loss, Ford President and CEO Alan Mulally, also laid out the car giant's plan to reverse its fortunes. This was categorised as "a significant acceleration of its transformation plan with the addition of several new fuel-efficient small vehicles in North America and a realignment of its North American manufacturing."

"We continue to take fast and decisive action implementing our plan and responding to the rapidly changing business environment," said Ford President and CEO Alan Mulally, in the company's official statement announcing the losses.

"Ford is moving aggressively using our global product strengths to introduce additional smaller vehicles in North America and to provide outstanding fuel economy with every new product."

Mulally said Ford had made significant progress in consolidating its global programs.

"The progress we have made in working together to create a 'One Ford' global enterprise during the past two years gives us a unique competitive advantage in today's environment. We are in a stronger position than ever to leverage Ford's global assets to address the North American business environment," said.

In terms of product line-up, Mullaly has committed Ford to an almost complete overhaul of its US line-up across the Ford, Lincoln and Mercury brands. The carmaker will look to realign its models away from large trucks and SUVs and introduce a number of smaller models -- many sourced from Ford of Europe.

Key European-engineered models, according to Ford's media statement include:
Transit Connect; four and five-door versions of Fiesta and Focus; a Mercury-branded small car, and "new European small vehicle that will be a 'whitespace' entry in North America".

Traditional US market products set for substantial overhauls include F150, Mustang, Taurus and Explorer.

Ford will also introduce new downsized EcoBoost powerplants. The first V6 EcoBoost powerplants will be introduced in 2009 with four-cylinder EcoBoost engines following a year later "in both North America and Europe".

Ford says it plans to bring North American production of four-cylinder engines to more than 1 million units by 2011, and will increase hybrid volume and offerings next year. Production of the all-new 2010 Ford Fusion Hybrid and Mercury Milan Hybrid begins in December.

In terms of manufacturing changes, Ford will move to convert three existing North American truck and SUV plants to small car production; the first conversion commencing later this year.

According to Ford: "The moves are in addition to Ford's announcements in May and June that it is reducing its North American production plans for large trucks and SUVs for the remainder of 2008, as well as increasing production of smaller cars and crossovers."

Ford President of The Americas, Mark Fields said:  "We are transforming Ford's North American manufacturing operations into a lean, flexible system that is fully competitive with the best in the business. We remain committed to matching our capacity with real consumer demand, and we are equipping nearly all of our assembly plants with flexible body shops, ensuring we can respond quickly to changing consumer tastes.

"In addition, we are adding four-cylinder engine capacity to meet the growing consumer demand, while expanding production of our new EcoBoost engines, six-speed transmissions and other fuel-saving technologies," Fields said.

Ford North America says it expects to reduce annual operating costs by US$5 billion by the end of 2008.

"We are accelerating the development of the new products customers want and value," Mulally said.

"We sell some of the best vehicles in the world in our profitable European and Asian operations, and we will bring many of them to North America on top of our already aggressive product plans."

"While we have no intention of giving up our long-time truck leadership, we are creating a new Ford in North America on a foundation of small, fuel-efficient cars and crossovers that will set new standards for quality, fuel economy, product features and refinement," Fields opined.

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