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Ford US projects 2nd quarter sales rise

Ford US has today announced that it expects to see a modest improvement in sales in the second quarter of 2009, but is quick to add that it will not be scaling up production until such time as real demand actually presents itself.


According to Ford US's senior economist Emily Kolinski-Morris, sales could recover to a seasonally adjusted annual rate of as much as 11.5 million units once government funds filter down to consumers in the form of credit through banks and if the Obama administration signs into law a scrappage bill.

In March, the SAAR was 9.9 million, but Ford sales analysis and reporting manager George Pipas says that figure was misleading because of a concentration of sales to daily rental fleets.

"People got way ahead of themselves last month like happy days are here again when the SAAR went to 9.9 million off of February's 9.1. It was all daily rental," said Mr Pipas. "It was all concentrated on a few manufacturers. Consumer demand was basically about the same as it was in February."

For April, Ford will report a year-over-year decline but a gain in retail market share, its sixth in the past seven months. But one car will report a large year-over-year sales increase.

"Fusion is going to be jaw-dropping this month," Mr Pipas continued. "It will be a record month, the highest retail market share ever for that product and the second-best sales month ever."

Ford recently launched the heavily refreshed 2010 Fusion mid-sized sedan while at the same time discounting leftover 2009 models.

Mr Pipas said early demand for the Fusion hybrid is running at 35 per cent of total Fusion sales.

As for Ford's production plans if the economy starts to recover, Mr Pipas said he believes Ford is taking a conservative approach and keeping inventories low. At the end of March, Ford had an 80-day supply of vehicles.

However, Ms Morris said there are some positive signs that could trigger a recovery in sales.

"State and local governments already are receiving (federal) funds or anticipating receiving funds, and we've seen some signs that government fleet purchases are already starting to firm up a little bit," said Ms Morris. "And consumers are already getting higher take-home pay because tax credits were implemented in the form of lower withholding taxes in paycheques."

According to Ms Morris it will still take time for consumers to return to showrooms.

"How quickly that translates into additional spending, obviously there are going to be some lags," continued Ms Morris. "Having another $50 to $100 in your paycheque is not necessarily going to drive you to go out and buy another car. But it does help with the monthly cash flow and maybe making consumers feel a little more comfortable about their ability to manage through the crisis."

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