Bloomberg News

GM, Ford to Cut 2nd-Quarter North American Production (Update3)

March 01, 2006

General Motors Corp. and Ford Motor Co. (F:US), the two biggest U.S. automakers, said they will cut second-quarter production in North America after reporting U.S. sales declines in February.

Ford will trim North American vehicle production by 1.8 percent, while GM will reduce output by 3.7 percent, the companies said in separate statements today.

Ford plans to build 890,000 cars and trucks in North America during the second quarter, compared with 906,000 in 2005's second quarter. The company also repeated a previous production forecast for this quarter of 885,000 vehicles. GM's second-quarter North American output will be 1.2 million vehicles. GM said its first-quarter forecast is unchanged at 1.25 million cars and trucks.

February sales for Detroit-based GM declined 2.5 percent while Dearborn, Michigan-based Ford's slid 4 percent. Both automakers had reported gains in January because of increased sales to rental-car companies and corporate fleets.

Last year, GM reduced North American production 7 percent from 2004 to 4.86 million as its U.S. sales dropped 4.3 percent. Ford cut its output 5.7 percent to 3.33 million cars and trucks; its U.S. sales dropped 5 percent.

Ford, in a separate U.S. regulatory filing, said its North American factories are operating at about 75 percent of capacity, ``which is not sustainable.''

Fitch Ratings today cut GM's debt rating one level, to five below investment grade, in part because of concerns over whether the automaker has done enough to reduce North American operating costs.

GM shares fell 41 cents, or 2 percent, to $19.90 at 4:16 p.m. in New York Stock Exchange composite trading. Ford shares declined 2 cents to $7.95.

To contact the reporter on this story: Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net

To contact the editor responsible for this story: Dave Versical at dversical@bloomberg.net


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