Second Largest Automaker to cut down Production

After losing customers, who shifted from its pickups and SUVs to higher-mileage models due to the ever increasing gas prices, Ford, the second largest automaker, announced its decision on Friday to cut down production in North America.

In the final quarter of this year, outputs will be cut by 21%, which will be in harmony with the shrinking demand.

The Detroit-based company has incurred heavy loses owing to the gas prices, which has doubled over the past two years. Most of its products are larger vehicles with poor fuel-efficiency. Majority of its share in the US market has dropped and foreign competitors are gaining advantage from this situation.

An auto analyst at Global Insights in Philadelphia, Rebecca Lindland, said that Ford will cut down the production and sale of its pick-up trucks, which account for more than half of Ford’s sale in North America.

Ford will produce only three million cars and trucks this year. Its number two slot has been usurped by Toyota, which is planning to surpass General Motors to be on the number one slot.

After bearing a loss of $ 2 billion last year in North America, Ford has decided to abridge its manpower by 30,000 over the next three years.

Not only Ford, but General Motors Corp. and DaimlerChrysler AG's Chrysler Group also suffered losses owing to the gasoline prices. In order to meet the consumers demand for fuel efficient cars, these two companies have also decided to shift from the production of heavy vehicles to smaller cars.

The combined shares of the three giant companies fell from 58.7% to 54.5% for the first seven months of 2006.

The President of the US, Bush, said that the economy will continue to grow in the second half of the year as well. However, many economists are of the view that the economy is slowing and will increase only by about two and a half percent for the second half of the year.

Consumers are suffering the most with the ever increasing energy prices. Oil prices remain above $70 a barrel, a four-fold increase since 1999.