Being in the car business means constantly adjusting production to demand. If there are too few vehicles on dealer lots, buyers will take their business elsewhere. Too many means incentives have to be ramped up, reducing profits. The US car and light truck market was on fire last year as it powered its way to the best sales year ever. But 2016 has been a little less sunny for automakers. It’s not that sales are bad, it’s just that they aren’t quite as robust as they were last year.
The Ford F-150 pickup truck is the best selling vehicle in America and hugely important to the company’s profitability. The money Ford makes on one F-150 more than makes up for razor thin margins on some of its lesser vehicles, like the Fiesta. Even though F-150 sales are up 5.5% for the year so far, deliveries were down 2.6% in September. Dealers now have a 95 day supply on hand. That number is higher than Ford would like, so on Monday it announced it is cutting production.
It will shut down its truck assembly line in Kansas City for a week. Production at the Dearborn truck facility will continue without interruption. “During our second quarter financial call, we said we expected the overall retail industry to decline in the second half of the year from the same period last year. We also said to expect to see some production adjustments in the second half — this is one of them. We continue matching production to meet demand,” Ford spokeswoman Kelli Felker said.