GM and Ford Plan To Increase Truck Production

December 6, 2002: Bill Koenig writing for Bloomberg reported that General Motors Corp. and Ford Motor Co. said they'll go ahead with planned first-quarter increases in light-truck production, as some analysts questioned the moves after U.S. sales declined last month.

General Motors, plans to raise North American light-truck production 12 percent from the year-earlier quarter to 840,000. Ford, the second biggest, has said it will boost its output of the vehicles 7.6 percent to 710,000.

"There's no indication first-quarter auto sales will be robust enough to accommodate that level of production," said IRN Inc. analyst Mike Wall, whose Grand Rapids, Michigan, company forecasts vehicle plans for suppliers. The increased production appears to be "a game of light truck 'chicken,"' Goldman Sachs analyst Gary Lapidus wrote in a report.

November total U.S. sales fell 18 percent for General Motors, including a 26 percent drop for light trucks. Ford's total declined 20 percent, with trucks down 14 percent. Industrywide sales fell for a second straight month as discount loans and cash rebates attracted fewer buyers, and U.S.-based automakers' combined market share slid to a record low.

General Motors is "pretty comfortable with our inventories right now," said John Smith, who will become the company's group vice president in charge of sales and marketing on Jan. 1, in an interview. "I don't feel uncomfortable on the truck side."

Much of Ford's first-quarter increase is because its Wayne, Michigan, truck plant will be in production the entire period, said George Pipas, a sales analyst for the automaker. In this year's first quarter, the factory was closed for two months to prepare to build redesigned 2003 Expedition and Navigator large sport-utilities.

Rivals have stepped up light-truck competition with new or redesigned models such as Toyota Motor Corp.'s Tundra pickup and Sequoia sport-utility and Honda Motor Co.'s Pilot sport-utility. Nissan Motor Co. also plans to add a full-size pickup and sport-utility.

Foreign rivals' light-truck expansion has contributed to lower combined U.S. market share for General Motors, Ford and DaimlerChrysler AG's Chrysler. That share fell to a record low 58.8 percent last month.

Detroit-based General Motors plans to increase combined North American production of cars and trucks 3.5 percent in the first quarter from a year earlier. Dearborn, Michigan-based Ford's combined plan is for a 4.9 percent decrease.