Ford Restructuring May End Minivan Production

Friday January 20, 2006; USA Today reported that in an attempt to exit unprofitable and flagging markets, Ford Motor (F) is expected to say Monday that it will get out of the minivan segment, according to two sources familiar with the plan who didn't want their names used ahead of the official announcement.

Ford will lay out an overall restructuring plan that will include plant closures, layoffs and executive departures Monday when it announces fourth-quarter earnings.

Ford spokesman Jon Harmon would not confirm a minivan announcement, but he said the restructuring plan includes some changes in the company's product lineup.

The automaker is expected to post a profit for the year but lose money in North America. Through the first three quarters, Ford lost $1.34 billion in North America.

Ford's minivans have been weak performers in a crowded segment. Last year, Ford Freestar sales were down 25.1% from 2004, and Mercury Monterey sales were off 53.1%, according to Autodata. Freestar, formerly known as Windstar, was remodeled for the 2004 model year.

If Ford quits making minivans, "What they're essentially saying is, if you can't be No. 1 or 2 in a segment, then it's not worth being there," says David Cole, chairman of the Center for Automotive Research.

"We have to pick and choose where we want to compete," Mark Fields, Ford's executive vice president and president of the Americas, said in an interview last week. "The idea you have to be in all the segments, that's an old way of thinking."

Ford already has announced that new products will be going into the plant where it currently makes the Freestar and Monterey minivans. The company announced earlier this month that it will add the new Ford Edge and Lincoln MKX crossover vehicles to the Oakville, Ontario, plant, starting production in October.

Ford also is considering building a vehicle similar to a Ford Fairlane concept shown at auto shows last year. That had three rows of seating but looked more like a tall station wagon than a minivan.

Crossovers are the hot new segment in the auto industry. Built on car platforms and engineered with SUV-like functionality, crossover sales hit more than 2 million last year, up from zero in 1995.

General Motors also might be thinking about leaving the minivan market. It is closing its Doraville, Ga., plant that makes its minivans sometime in 2008.

The automaker is still trying to figure out what kind of vehicle should replace them, spokesman Tom Wilkinson said. "The reality is, we're looking at a lot of alternatives for people carriers," he said.