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Talk of the Town

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BREAKING 10:30am 5-22-08 Rising Gas Prices Forces Ford Cutbacks on Trucks & SUV Production
Thursday, May 22, 2008 8:22am

NEW YORK From CNNMoney (By: Tom Pace, Talk of the Town) BREAKING ECONOMY: 10:30am 5-22-08 Amidst news of record-high gas prices, and motorists seeking the most fuel-efficient vehicles, Ford Motor Co. announced Thursday that it will cut production of pickups and SUVs. It's also likely that Ford will miss its long-held goal of returning its core North American auto unit to profitability next year, according to CNN.

The company said it now hopes to break even companywide next year, as overseas profits balance out losses at home. It also announced it would slash production of pickups and SUVs due to changing consumer demand.

"We saw a real change in the industry demand in pickups and SUV in the first two weeks of May," said Ford Chief Executive Alan Mulally. "It seems to us we reached a tipping point."

Ford now believes that the change in vehicle choice is structural, not cyclical, Mulally said.

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.

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.

Ford trimmed an additional 20,000 vehicles, or 3%, from its North American plans, for the second quarter, putting its target at 690,000 vehicles. That will leave output down 15% from year-ago levels.