Ford Could Halt Production Of America's Best-Selling Vehicle For Weeks

  • Ford Could Halt Production Of America's Best-Selling Vehicle For Weeks

Ford Could Halt Production Of America's Best-Selling Vehicle For Weeks

Just as auto sales start to heat up, Ford is facing the daunting prospect of seeing a major drop in the supply of its best selling and most profitable vehicle, the F-150 pickup truck.

Analysts and the company said F-150 inventory is fine for now but the situation is volatile.

Ford expects the production shortage will "have an adverse impact" on near-term results but it maintains full-year EPS guidance of $1.45-$1.70. The company used to supply components to the famous automakers namely, Ford Motor Co., Fiat Chrysler Automobiles NV and General Motors Co.

F-Series pickups generate most of Ford's profits and Morgan Stanley recently estimated the value of the franchise as greater than that of the entire company.

However the F-150 has been the best selling USA vehicle by any manufacturer for more than 40 years.

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"The F-Series is the profit machine for Dearborn", said Dave Sullivan, manager of product analysis at AutoPacific Inc. The vehicle generated $41 billion in revenue past year, about 28 percent of total sales and the lion's share of its profits.

Ford fell 1.9 percent to $11.06 at 3:50 NY trading. GM shares were off 0.8 percent.

"This is a fluid situation", Kelli Felker, a Ford spokeswoman, said via email. "We are working hard to get replacement parts". A Ford spokeswoman said on Wednesday the automaker is working very closely with the supplier to get production re-started.

"There's not a lot of this type of supplier around that has capacity to pick up that kind of volume", said Kristin Dziczek, an economist and labor expert at the Center for Automotive Research. The incident underscores concerns raised by some suppliers who worry about the auto industry's turn towards sole sourcing, or relying on a single parts manufacturer, for critical vehicle pieces. That depends on how long the assembly lines are shut down.

Meridian's Eaton Rapids factory supplies lightweight cast metal parts for global automakers, which are using more lightweight materials such as magnesium and aluminum in recent years to reduce improve fuel efficiency. The plant supplies other automakers as well, but so far only one - Fiat Chrysler - has reported an impact on production.

GM said on Wednesday it has temporarily halted production of Chevrolet Express and GMC Savana full-size vans at its Wentzville plant because of parts shortages caused by the fire on May 2. Mercedes is investing $1 billion at the site for production of electric cars, including battery manufacturing, and expand logistics operations.

In addition to the lack of sweet, sweet F-150 trucks rolling off the line, the big bummer about the stoppage is that it means that 3,600 workers at Ford's Kansas City plant are being furloughed while the parts shortage is sorted out.