Dearborn, Michigan, May 20 (Bloomberg) -- Ford Motor Co., the world's second-largest automaker, will hasten cost cuts this year because it can't raise prices enough on most U.S. models to offset the impact of rebates and low-interest loans.

Speaking to analysts, Chief Operating Officer Nick Scheele said competition on incentives ``is even more intense'' than expected. Increased cost-cutting ``will make up for'' the increased incentive expenses, he said.

Ford, which had losses totaling $6.43 billion in 2001 and 2002, is accelerating reductions because Chief Executive Officer William Clay Ford Jr. has vowed not to match discounts by bigger rival General Motors Corp. General Motors spent an industry-leading $3,817 on the discounts for each car it sold in April, compared with $3,486 for Ford, according to CNW Marketing.

Speeding Things Up

Ford is speeding up plans announced last year to cut $9 billion in costs in a bid to meet Bill Ford's goal of $7 billion in pretax profits by 2005. Bill Ford already has ordered $1 billion in reductions scheduled for later years moved into 2003 in an effort to meet the goal. The company today declined to elaborate on how it will change cost allocations.

The company will have to make up for incentives on Ford, Lincoln and Mercury vehicles sold in the U.S. to stay competitive with offers by bigger rival General Motors and DaimlerChrysler AG's Chrysler, Scheele said.

Also, an ``escalation of competitive marketing incentives will lead to net pricing below'' 1 percent for Ford-brand cars and trucks sold in Europe this year, according to a slide on the company's Web site. In January Ford said net prices, the amount of revenue left after incentives are subtracted, would rise 1 percent in Europe. Net prices fell 1.4 percent in Europe during the first quarter.

General Motors, the world's largest automaker, has been extending incentives to revive U.S. sales. Ford's bigger rival is waiving remaining lease payments for customers who buy another of its new models.

Discounts

General Motors so far this month has given more than 300,000 discount coupons to employees and is offering six-year vehicle loans at 1.9 percent. It had an 8.6 percent drop in sales in the first months of 2003.

Ford said net prices of U.S. Ford, Lincoln and Mercury models rose 0.2 percent during the first quarter. Executives said last month maintaining that pace would be difficult because of incentives offered by rivals.

Ford reiterated its forecast for full-year earnings of 70 cents a share. The Dearborn, Michigan-based company had first-quarter net income of $896 million, or 45 cents a share.

 

William Clay Ford is sacrificing the future in his cost-cutting moves. Is it any wonder that while Ford loses billions per year that Japanese manufacturers are thriving?

Their biggest problem is PRODUCT, not price. Come out with great products that are reliable, and you won't have to pay people to buy your crap.

 

tru tru

we'll see what happens after the retro mustang is released

 

Funny that you mention this.... I just heard this morning that Ford has had better than expected earnings this quarter.... quick report on WCBS (news 88) in New York.

 

well when u have a company that's using next year's PROJECTED profits to pay for this year's bonuses, that's a little wack!!!

now i got people calling me all the time asking if the gov't's gonna let Ford go belly-up...pretty crazy stuff

and Tom, Ford reported last quarter over a month ago...granted, it WAS better than expected, but y they're saying this now is beyond me...they report this current quarter July 16th

 

I saw an article about that; the credit markets are worried about Ford Credit's outstanding loan portfolio.

No way the Government would let Ford go belly-up. They bailed Chrysler out in the 80s, and would bail Ford out as well if it ever came to it,.

They need to be spending MORE money on basic vehicle technology: engines, chassis, etc. Take a great engine, couple it with a great chassis, build a reliable car around it.

 

Great looking car, but leave it to Ford to screw it up. They took a fundamentally good chassis (the DEW98 chassis used in the Lincoln LS and the Jaguar S-Type) and proceeded to dumb it down by replacing the front suspension with a strut suspension and converting the back from multi-link to a fixed axle setup in the interest of cost-savings. The chassis starts to look a whole lot like the chassis it's replacing.

Poor SVT gets to now figure out how to undo everything that Ford did to it. I feel sorry for John Colletti and the gang.

 

It still amazes me that Ford has not had a legitimate hot sedan. Even Caddy is going after the BMW5 and Audi6. By the way, i don't consider the Taurus with a 200 h.p. 6 a hot sedan.

 

looks like 0% and all those rebates finally caught to them and took a big bite out of there shabbily crafted ass.

 

At Ford Quality is Job 1 unless it costs money

Overworked engineers and management that keeps changing its mind... You get a bonus for how much money you remove from a car, so some VP goes in and makes a huge cost save that makes vehicle reliability worse than it already is... he gets a fat bonus, they produce a shit car... and that happens on every program.

P.S. We got an 05 Mustang prototype in our garage... its basically an LS w/ a bigger engine... can't wait till the next generation of prototypes come out