Ford Responds to Rising Gas Prices With Compact Cars

For two decades now, pickup trucks and SUVs have been Ford's bread and butter in the United States. It was the Ford Explorer that ushered in the era of the SUV and the "bigger is better" mentality among automakers.

However, Ford's U.S. sales are down 14 percent this year. With gas prices so high, Americans are demanding smaller, more fuel-efficient cars.

"It is gas prices. Everyone can see the market for SUVs and trucks is now in the tank, basically," said Mark Gilles, executive editor of CarandDriver.com.

Ford has decided to give American consumers what they want, ushering out the era of big SUVs for smaller, more efficient cars.

Ford is expected to announce that it will convert three North American assembly plants from production of SUVs and trucks into production of smaller cars.

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"They have to quickly think about more fuel-efficient, smaller vehicles, hybrids that they are not currently tooled to build in their facilities," said Laurie Harbour, the president of Harbour-Felax Group, a financial advisory firm.

Other manufacturers, including General Motors, have also begun to reassess what they produce, in light of what consumers are looking for. GM has turned to plug-in hybrids to revamp its image and improve dismal sales, hoping that the Chevrolet Volt, a small, electric, plug-in car, set for production in 2010, will do just that.

It is expected that the massive Expedition and Navigator SUVs will soon no longer be seen on Ford's assembly lines in Wayne, Mich. One Ford worker said he welcomed the changes, and added that he hopes it saves his job.

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Strangely enough, even though in the United States Ford is associated with bigger vehicles, in Europe, the company is known for its compact cars.

For years, the company has built smaller cars, but it was building them catering to the European market. In a Ford showroom in London, buyers can choose between a complete line of compact cars.

"Ford has been a market leader here for many, many years, and still is in the UK," said Paul Hustler, general sales manager at Dees Wimbledon auto dealership in London.

But in the United States, Ford lost more than $15 billion in 2006 and 2007 and is showing losses for 2008, as well.

Industry experts said Ford is up against a wall and has no choice but to transition its production for the U.S. market from gas guzzlers to gas savers.

"It's been unprecedented to see this kind of change happen so rapidly in the automotive industry," Harbour said.

The only question is whether Ford can make the change quickly enough.

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