Ford sees production cut as its salvation

[jake75]

I am sure that GM and DC are happy to see this - but I do not understand how it is going to help Ford. Why do they think they can sell a $30,000 vehicle for $30,000 rather than $27,000 just because they are making fewer of them if GM or DC (or Toyota etc) are selling something comparable for $27,000. And Ford's costs per vehicle will go up as their fixed costs will be spread among fewer units, including the fixed costs of paying UAW workers to not work. I do not know if this is real or whether it is Memorex, but in today's paper a brand new 2006 T&C SWB with a msrp of $19,975 was advertised for $13,995. This has a 3.3 L V-6, AT, AC, PW, PDL, Remote entry, Cruise, Tilt Wheel, AM/FM CD Stereo radio. If true, what a deal!

[ColonelPanic]

I can understand why Ford feels the need to thin down their new vehicle inventories... It doesn't make sense to flood the market with crap nobody is buying or wants to buy... I don't know how much they'll be able to save by taking this route. I suppose they could save a bit by requiring less materials, components, etc. that are associated with production. Plus, they won't have the burden of all that extra completed product to try to manage - that may save them some dough too... I don't think tactics such as these can pull them out of the hole entirely, however.Ford is a huge employer in this area with two plants located down the road in Louisville, KY... And both are on the list for taking a little vacation later on... http://www.wlky.com/money/9699186/detail.html The news about those two plants wasn't too terribly surprising... As gas frequently hits $3 and beyond, people may not be lining up as they once did to buy the types of vehicles Ford makes here. One plant churns out the super duty trucks, I won't even touch that one. The other makes the Explorer - not anywhere near as thirsty but still, 20 MPG is far from fuel efficient. I don't blame Ford for wanting to cut back on their inventory of these, especially if sales is going downward and no upswing is in sight.

[ColonelPanic]

Heh, the local powers that be are now fighting to keep Ford in town... Shall be interesting to see what comes of this.http://www.courier-journal.com...EWS01Switching to CARS may be a good idea in this day and age. Maybe the local and state government can bribe Ford enough to get them to stay and convert the lines to something other than SUV's and trucks that people will actually buy...

[kostby]

Fewer vehicles, sold at a higher average price, by dealers concentrating establishing customer relationships and exceeding their customers' expectations, rather than just 'closing sales'.It just may work.For a couple of decades at least, there have been far more Ford/Lincoln/Mercury dealers than needed to move product. Ford tried to thin the ranks almost a decade ago with a proposal to close many smaller dealerships and open mega-metropolitan 'Dealerships of the Future' (my nomenclature), but the dealer network rejected it.Thus, for most dealerships the ONLY thing they sell on is price. The exception in auto-retailing is and has been the luxury, performance, and near-luxury makes: Lexus, Infinity, Mercedes, Porsche, and so on. There are far fewer dealers, often only 1 per metro area. They cater to wealthy customers who A) can afford to pay more and B)are willing to pay more for excellent service. (What a concept!)Unless you live in a metro area the size of Chicago or larger, it's unlikely that you will EVER hear your local Lexus/Infinity/Mercedes/Porsche dealerships claiming 'Lowest prices in town' You're much more likely to hear 'Schedule an appointment to experience the exciting new Mumheber Excessive Boxcleft XKZ-Type R with leather hides from Harvard-educated cattle and 12-speed TransQuark Drive.'But, when you've got 12 other Ford dealerships in your metro area, all advertising heavily, and selling strictly on price, it's pretty near impossible to distinguish yourself and convince buyers to BUY their next vehicle from you, because you have 'The best service department in town'.And, if indeed it IS true that you DO have the best service in town, they'll still buy from the guy with the lowest price, and then bring it to you when it needs service.A small-town Ford dealer-friend of mine complains about buyers (like me) who 'only buy on price'. The last Ford car I bought from him was at $500 over invoice and about $2,000 off MSRP on a hard-to-find color of a VERY popular model, . For comparison, Indiana sales tax (5% at the time) on the same car was $1,000. I know the argument that invoice is not the 'true final dealer cost' of the car, but still, it IS interesting that the state of Indiana made twice as much on the car than the dealer did, BEFORE excise tax on the license plates!UPDATE: Link to an interesting British analysis of Alan Mulally (Bill Ford's replacement) --> http://observer.guardian.co.uk....html