Ford Motor Co. VP Reflects on 2002 Business Year

John Birchard
Washington, D.C.
December 29, 2002

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As 2002 comes to a close, James O'Connor, Group Vice President for Ford's North America Marketing Sales and Service, talked about issues facing the world's number two automaker.

The conversation began with a prediction about sales.

When asked whether 2003 would see a decline in new car and light truck sales in the U.S., he replied, "There might be a little bit of a pull-back, a modest pull-back, but we think it'll be around the 16.5 range, 16.5 million [units] range."

The sales slowdown in the latter part of 2002 is attributed by some analysts to the public growing bored with the large customer incentives that have driven the market for over a year - zero percent financing and $3,000 or $4,000 rebates on many vehicles.

"Clearly, they're still very effective. I mean, if you could get a [home] mortgage at zero [percent interest rate], zero, zero, would you go out and buy a house or re-finance? So, when you put out zero-zero, smart customers, smart customers buy because it's such a good buy," Mr. O'Conner said. "So, I think we haven't run the course yet."

An analyst from JD Power & Associates has predicted that, if sales trends continue, Toyota will pass Ford as the number one seller of cars in the U.S. in the next few months. It would be the first time in history an import brand was number one, even though Ford still leads in overall sales with light trucks. Jim O'Connor was asked if Toyota's surge is a threat.

"Ford Motor Company, the Ford brand itself, does around three million units [a year], cars and trucks. Toyota will probably do around a 1.5 million, very good performance," he said. "But, our focus hasn't really been on trying to beat Toyota. It's really to restore the company to profitability."

A variety of issues effect Ford's chances at restoring profitability, a shortage of money to finance new product, quality problems, excess plant capacity, heavy pension debt and rising health care costs for employees. The company has more than enough to keep it busy.