Ford October U.S. sales drop 30.2%

(RTTNews) - Ford Motor Co. (F | Quote | Chart | News | PowerRating), the third largest U.S. automaker, said Monday that its October U.S. sales dropped 30.2% from last year, hurt by a weakening economy and tight credit conditions.

The Dearborn, Michigan-based automaker, which was displaced by Toyota as No.2 U.S. automaker last year, said it sold 132,838 vehicles in October, down from 190,195 vehicles sold in the same month last year. For September, the automaker had reported a 34.6% drop in vehicle sales.

Total sales of Ford, Lincoln and Mercury vehicles fell 29.2% to 129,121 units in October from 182,434 units a year ago. Volvo sales plunged 52.1% year over year to 3,717 units.

In the Ford, Lincoln and Mercury brands, car sales fell 26.8% year over year to 40,453 units in October, while crossover utility sales, which include Ford Escape, Edge and Flex, dipped 38.8% to 22,552 units and SUV sales dropped 53.9% to 9,102 units. Truck and van sales slipped 19.2% to 56,613 units. Even sales of the Focus, a hot-selling small car, fell 18.2% to 10,576 units in October, while sales of another fuel-efficient car Escape dropped 18.8% to 9,886 units.

Sales of Ford's F-Series truck, America's best selling vehicle for 31 years in a row, fell 16.3% to 43,324 units in October from 51,741 units in the same month last year. The lucrative truck market has been particularly hard hit by the continued downturn in the U.S. home-construction market.

The national marketing launch of the new F-150 began Sunday, November 2, and Ford said nearly 3,000 new F-150s already were delivered to customers in October. The 2009 model Ford F-150 has class-leading capability, delivering 11,300 pounds towing and 3,030 pounds payload and unsurpassed fuel economy of 21/15 highway/city mpg with the SFE package, which is available on F-150's highest volume XL and XLT series.

"We're launching the new F-150 from a position of strength," said Jim Farley, Ford group vice president, Marketing and Communications.

Late last month, Ford announced that it was restoring the third crew to Dearborn Truck Plant in January, a move that would rehire about 1,000 workers to the plant's work force. Despite being hit by the weakening economy and tight credit, the automaker said, it plans to rehire its workers as it expects a strong customer demand for its new F-150 pickup truck.

For the year to date period, Ford's total vehicle sales declined 18.7% to 1.73 million units from 2.12 million units in the same period last year.

Total sales of Ford, Lincoln and Mercury vehicles fell 18.3% to 1.66 million units in the year to date period from $2.04 million units last year. Volvo sales for the year to date period dropped 28.1% to 63,745 units.

Looking forward, Farley said, "Challenging external conditions present the best opportunity to challenge the competition. In the next nine months, we will introduce nine new products plus two new hybrids, which together account for 45 percent of our volume in 2009. Every new product will offer customers class-leading fuel economy and product quality that's on par with the best in the industry."

The U.S. market continues to be difficult for every automaker, with consumer confidence weak and 2008 sales expected to be the lowest in more than a decade. However, it is most difficult for the Detroit Three, who have relied more heavily on sales of trucks and SUVs, than their foreign counterparts.

With higher fuel prices and food costs, combined with the impact of the recent credit crunch and competition from Asian counterparts, the Detroit Three are finding it hard to stem the consistent decline in sales. The economic slowdown and a decrease in dispensable income adding to their woes, consumers are now more than ever focusing on value and cost-efficiency, preferring small cars to gas-guzzling ones.

Detroit's automakers have been making the shift to more fuel-efficient vehicles, but not at the pace that matches consumers' drive to hybrids and high mileage models made overseas. Gas prices have accelerated the retreat from trucks and sport utility vehicles, leaving the Detroit Three at the most critical crossroads in 30 years.

In August, Ford cut its North American production forecast for the second-half of 2008 by 50,000 vehicles, reflecting lower sales to daily rental companies, lower production associated with the transfer of the Ford Expedition and Lincoln Navigator from Michigan Truck Plant to Kentucky Truck Plant, and a downward revision to the company's U.S. industry sales forecast.

For its second quarter ended June 30, Ford reported a dismal performance - the worst ever in its 105-year history. Hurt by write-offs due to a decline in value of its North American assets and lease portfolio of Ford Credit, the company's auto loan arm, Ford lost a whopping $8.67 billion or $3.88 per share in the quarter, compared with a net profit of $750 million or $0.31 per share in the year-ago period. The recent second quarter loss is worse than the company's earlier record quarterly loss of $6.7 billion, reported in the first quarter of 1992.

Billionaire investor Kirk Kerkorian's Tracinda Corp. said last month that it has sold 7.3 million common shares of Ford, as it is shifting its focus to the gaming and hospitality and oil and gas industries. Consequent to the sale, Tracinda reduced its stake in the automaker to just over 6%.

Tracinda also said that it planned to further reduce its stake in Ford and may sell all of its remaining 133.5 million shares, which represents about 6.09% of the Ford's outstanding shares.

The recent move from Kirk Kerkorian comes after over 60% drop in Ford shares since he raised his stake to about 6.5% in June and said he was willing to support the automaker's turnaround with an infusion of additional capital.

In another significant development, Ford said last month that its chief financial officer, Don Leclair, would retire on November 1, after an accomplished 32-year career. The company has named Lewis Booth to succeed Leclair as its executive vice president and chief financial officer.

According to a report from J.D. Power and Associates released last month, the auto industry could "collapse" outright in 2009.

"While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse," said Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates.

The firm predicted that U.S. new-vehicle retail sales will total 10.8 million units in 2008, 2 million below 2007. Overseas, vehicle sales are expected to decline in China, India and European markets, although the decline will be far more dramatic in mature markets.

The firm said the credit crisis will contribute to an already dire picture for the U.S. auto market, as consumers struggle to get auto loans. The report warned that there could be as many as 2.2 million fewer sales in 2008 if credit remains frozen and consumers are unable to purchase vehicles.

The automotive Web site Edmunds.com projected a 29% drop in October sales to their lowest level since January 1992.

Ford share are currently trading at $2.18, down a penny.

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