http://www.foxnews.com/story/0,2933,209207,00.html

 

I sort of figured this was coming, since Ford has had to use employee pricing and incentives to move trucks for the past two years. The downside is that Trucks have been their bread and butter money maker. I guess Ford finally realized that high gas prices are going to be here for a while and people that don't really need trucks are not going to keep buying them. We have seen enough posts here about people trading their trucks in for Toyotas and Honda Civics.

 

I was wondering when Ford would get smart enough to quit building so many vehicles that they have to give them away. Sure, it's been nice to have the vehicles at reduced cost since the prices are overly inflated anyway, but a company can't last by not making a profit.

We had to cut back production some this past summer at Nissan, so I know the feeling. The good thing about production cuts that it allowed us engineers more time to work on pre-production builds and vehicle lauches such as the '07 Altima.

 

The way I read it, Ford has to build a set number of units, in order to break even.

Building less units costs more money, unless you lay off people and close plants.

Sad news, really.

I hope all the foreign car/truck buyers are happy.

 

What does it have to do with foreign car/truck buyers? I am not understanding the logic in your statement...

 

Exactly.

 

It is just simple economics. Supply and Demand. With falling demand you either drop prices to sell product or you cut production to bring supply in line with demand. The only way imports figure into this is that people are buying small compact foreign cars instead of Fullsize Trucks and SUVs, which would be a shift in demand from trucks to small cars. Basically it is people that really don't use or need trucks are buying something else or people allow $3/ gallon gas to cause them to flip out and go upside down to save on gas but lose on negative equity. Fullsize trucks have never gotten great gas mileage.

 

Sure, all companies have a set number to break even under normal circumstances, but when people don't buy the product, the choice is either to lower the prices or to stop making so many of the product. For the sake of our resale value, the best thing is to make fewer trucks rather than to flood the market with cheap trucks.

Unfortunately, several years ago gas prices stayed cheap and many people were doing better economically, and they thought that they can drive these trucks that they really didn't need. Now they are freaking out realizing what they really can afford vs. realizing that they can't truly afford that big truck and SUV that they really aren't utilizing. Then, there are those of us that afford what we drive because we can't pull a big travel trailer with a Sentra, haul a load of dirt in a Prius, or haul a load of furniture and the big TV in a Camry.