Ford's current line up disappoints all

Ford Motor Co. declining sales of sport-utility vehicles may result to a failure of returning to profit in North America by 2008.

According to a report, a jump in gasoline prices is hurting demand for SUVs. Competition from General Motors Corp. and Toyota Motor Corp. also may further decrease the sales of Ford's pickup trucks.

Mark Fields, the executive at Ford, who is responsible for executing the struggling auto maker's turnaround plan, asserted on June 21 that the company's North American automotive business will indeed achieve profitability on time, therefore, ignoring all the reports of Ford's losses. "We will return to profits no later than 2008"‚"we are committed to that," he told reporters.

The question that has arised is that whether Ford can execute its plan to stock its passenger-car and crossover-SUV lineups with compelling new designs in the next three years and bring them to market fast enough to make up for falling demand of its SUVs.

William Clay Ford Jr., chief executive officer and great- grandson of the company's founder, had made a pledge in January to revive earnings, partly by cutting 30,000 jobs over six years. Fields had also commented that improved car and truck designs would help halt a 10-year decline in U.S. market share.
As gasoline prices rose by 34 percent in this year's first five months, Ford's U.S. sales also tumbled 27 percent for the mid-size Explorer SUV and 30 percent for the larger Expedition.
The Dearborn, Michigan-based automaker lost $1.19 billion in the first quarter, mainly because of North American automotive losses and costs to cut jobs in the region.

"A lot of that is in the stock at this point," said Dan Poole, who helps manage about $ 34 billion at Cleveland-based National City Corp." According to him, it will be a bigger surprise if they are able to achieve the profit goal. National City owns Ford shares, which fell to their lowest close in almost 14 years yesterday.

Ford's shares traded closed at $ 6.43 on June 21. If they fall $ 6 per share it would be astonishing and would leave Ford with a market capitalization of less than $ 12 billion.

Looking at Ford's efforts to mantain the company's target for profitability by 2008, analysts were reminded that it wasn't an ambitious target to begin with. "It's not a very lofty goal," says Standard & Poor's credit analyst Bob Schultz.

S&P has kept Ford on negative credit watch and Schultz expects Ford's 2006 losses to be worse than 2005. Ford's total earnings last year were $ 2 billion on the strength of writing car and truck loans at Ford Motor Credit.

However, Fields said, "I don't spend a lot of time worrying about what the outside world thinks," "I don't get frustrated, I get motivated. This is typical of a turnaround."

Ford is expecting to attract SUV buyers who want better fuel efficiency with two new crossover models. Ford Edge and Lincoln MKX which are built on car platforms with much of the same capability as an SUV will go on sale in November.

Ford also expects to corner the market on all-wheel-drive sedans. In view of Fields, 50% of Ford buyers say they want all-wheel drive in sedans for a greater feeling of security. In 2007, Ford Fusion, Mercury Milan and Lincoln MKZ, formerly known as Zephyr, will get all-wheel drive.

He also mentioned the company is on track to meet its goal of returning to profitability in its North American auto business by 2008.