Automotive News reported that first-quarter production cuts are planned by General Motors and Ford Motor Co. in the industry’s most lucrative market – high-profit trucks and SUVs.
These heavier, more robust vehicles are a mainstream option as RV tow vehicles and their strong sales have been linked with the recreational vehicle industry’s aggressive growth in the towable sector.
The cutbacks by the two auto giants came in response to disappointing sales in November, which may signal a shift by consumers toward smaller, more fuel-efficient vehicles. And because the cutbacks will affect the companies’ most profitable vehicles, Automotive News said, the two automakers’ earnings “will be pressured.”
Ford will trim production to 930,000 vehicles, down 7.7% compared to thethe same period last year. About 65% of the automaker’s 78,000-unit decline will come in the truck segment, which includes SUVs such as the Ford Explorer and Expedition.
General Motors will slash production by 95,000 units to 1.25 million vehicles. That’s down 7.1% from the first quarter of 2004. Nearly 54% of GM’s production trimming will come from the truck segment.
“We saw the peak in traditional sport-utility vehicles two or three years ago,” said George Pipas, Ford’s sales analysis and reporting manager. “The best days for those products are behind.”
Pipas attributes 80 percent of Ford’s planned first-quarter production drop to two permanent cutbacks. This month, the automaker will drop a shift at its St. Louis plant, which assembles the Explorer, Mercury Mountaineer and Lincoln Aviator.
In February, Ford closed its Edison, N.J., plant, which made the Ford Ranger pickup.
Given healthy demand for big pickups, plus updated products such as the Ford F-150 and Super Duty pickups, the automaker has no plans to cut production of full-sized pickups.
Meanwhile, an industry source said, GM has told suppliers that it will reduce production of its mid-sized SUVs.