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Ford Readies Responses to High Fuel Prices September 2004DEARBORN, Mich. - Despite rising fuel prices that threaten sales of Ford Motor Co.'s bread-and-butter trucks and sport utility vehicles, company Chairman Bill Ford says the nation's No. 2 automaker is poised to sustain a financial turnaround by increasing its sales in the crucial American market.Bill Ford acknowledged that purchases of smaller, more fuel-efficient vehicles could accelerate if oil prices stay close to the $50-a-barrel level, reached for the first time this week. That could be bad news for Ford, which counts on high-profit trucks and SUVs for the bulk of its sales. But Bill Ford is far from panic mode. For one thing, he said, the shift is likely to be gradual, with consumers opting for more economical midsize SUVs rather than larger ones. More important, he said, is the revamped vehicle portfolio Ford is rolling out, including the industry's first gas-electric hybrid SUV, a new flagship sedan and the fifth generation of its Mustang sports car. While he wouldn't provide specific market share goals for Ford in 2005 or beyond, Bill Ford said he expects to "start seeing a difference" in 2005. The wild card is uncertainty about fuel prices, according to the 47-year-old great-grandson of company founder Henry Ford. "If you could tell a customer the price of gasoline is going to be $2.20 (a gallon) for the next five years, they may not like it, but at least they could plan for it," he said. "It's hard to make a decision on a vehicle when you have no idea where the price of oil is going. We've had such a run-up in such a quick period, I think people are confused, and it confuses us because we're trying to satisfy them." Bill Ford took control of the company three years ago when it was mired in losses and plagued by eroding sales, questions about vehicle quality and the Firestone tire crisis. A massive restructuring ensued, marked by 35,000 job cuts and some plant closings. However, Ford's U.S. market share has fallen from 25.7 percent in 1995 to below 19 percent today, even as it ramped up spending on costly consumer incentives, according to the automotive forecasting firm CSM Worldwide. And Ford's stock now trades below $14 a share, about half of what it was five years ago. Bill Ford's restructuring did stem the financial hemorrhaging, though. After losing a combined $6.4 billion in 2001 and 2002, the company returned to profitability in 2003 and has repeatedly said it is on track to post a $7 billion pretax profit in 2006. Ford reduced costs by $3.2 billion in 2003 and is on track to trim another $800 million this year. "When I look back three years, we had fires raging everywhere," Bill Ford said. "But the good news is the fire, the panic, the employees' loss of confidence - all that is gone." With the company's finances in better shape - Ford has $26.8 billion in cash - Bill Ford said his focus has shifted to selling more vehicles and trying to stem market share losses to Toyota Motor Corp. and Nissan Motor Co. The company is completing the largest product in its 100-year history offensive among the Ford, Lincoln and Mercury brands. Ford has introduced nine new or revamped vehicles this year, including the Ford Escape Hybrid SUV and the flagship Ford Five-Hundred sedan. Ford also has plans for at least two other hybrid vehicles - another SUV and a midsize sedan - in the next few years. SOURCE: Herald.net | ||
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