Ford announces a slash in production

Ford, the second largest U.S. car manufacturer has announced a huge reduction in vehicle output in the fourth quarter. Ford will cut down its U.S. auto production by 21 percent and will try to accelerate its restructuring plan.

The auto maker has been struggling with rapidly falling sales for such profitable vehicles as pickup trucks and sport utility vehicles. The production cut will amount to 168,000 fewer units than a year ago. The move also lowers Ford's previously announced third-quarter production plan by 20,000 units.

Ford chairman and CEO Bill Ford said, “We know this decision will have a dramatic impact on our employees, as well as our suppliers.” But he added “This is, however, the right call for our customers, our dealers and our long-term future.”

The supply of several models will be sharply reduced with the new production plan. The company said that a lower sale of sports utility vehicles and light-trucks is expected due to high gas prices which in turn will lead to a higher demand of fuel-efficient vehicles.

Cutting down the total production by 9 percent from 2005, Ford expects to produce 3.05 million vehicles in North America, in the full year. The decision comes after Ford's auto sales in the crucial U.S. market saw a steep descent of 34 per cent in July.

Amidst fierce competition and high gas prices, Ford has suffered heavy loses in North America with the sales graph of its profitable pickups and SUVs coming down.

Ford shares dipped 7 cents to $8.10. An unexpected second-quarter loss of $123 million or 7 cents a share was reported by the company earlier in July compared with a profit of $946-million or 47 cents a share a year earlier. The company has lost money in seven of the last eight quarters