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GER - Rays of recovery - Ford raises output as sales surge

Reuters reported that Ford Motor Co was increasing production after a surge in sales ignited by the US cash for clunkers program.

Ford said that it would build another 6,000 Focus sedans in the current quarter by adding overtime and a Saturday shift at an assembly plant in Wayne. A second plant in Kansas City will increase output of the Escape by another 3,500 vehicles, reversing plans to shut down for two days this month. The actions take Ford's third quarter output in North America to 495,000 vehicles, up by 18% YoY.

Ford also set a fourth quarter production target of 570,000 vehicles, which represents a 33% YoY gain over last year.

Mr George Pipas sales analyst at Ford said that "I think we were surprised by the speed and the urgency with which consumers went to dealers."

Mr Pipas said that Ford expected US auto sales to slow once funding for the clunkers program had been spent. The company did not expect to end the year with surplus inventory. He added that "We're proceeding very carefully. When we get to the end of the year I believe our inventory levels will still be viewed as lean."

It may be noted that Ford is one of the big beneficiaries of the USD 3 billion auto sales stimulus program, which offers payments of up to USD 4,500 to people who trade in older, less fuel efficient vehicles for new, more efficient ones. Ford took 16% of the deals made under the clunkers program as compared with a retail market share of 13% this year to date. It had a sales increase in July, for July, its first since late 2007, and it has been gaining US market share.

The company had previously planned to announce detailed production plans in early September but said it had been forced to act earlier because sales were still strong in early August. Like other automakers, Ford was caught off guard by the success of the program, which began in July. Ford executives said funding for the clunkers program could be exhausted by late August or early September.

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