Ford becomes latest automaker to cut production

BN's Jeff Flock on Ford shutting down 5 plants due to oversupply.

Ford (NYSE:F) will temporarily bring some production to a halt by the end of the year, as the automaker responds to weakening demand for small cars.

Ford’s production cuts will impact five plants in North America, including three in the U.S. Flat Rock Assembly Plant in Michigan, where Ford builds the Mustang and Lincoln Continental, will close for two weeks. Ford Transit production in Kansas City will also shut down for two weeks. Michigan Assembly Plant, located in the city of Wayne, will go quiet for one week. The factory produces the Focus sedan and C-Max hatchback.

Two plants in Mexico are slated for production cuts. The Fiesta sedan is made in Cuautitlan, which will close for three weeks. Hermosillo, home of the Fusion and Lincoln MKZ sedans, is scheduled to shut down for a two-week period.

Ford said the move will help the company match production with customer demand. The company remains on track to have dealer inventories at planned levels by the end of 2017.

The plant shutdowns at Ford mark the latest move by a major industry player to reduce supply. General Motors (NYSE:GM) and Fiat Chrysler Automobiles (NYSE:FCAU) have also idled production lines to cut their output of slow-selling models, particularly sedans that have lost some of their luster amid booming SUV demand. GM reportedly extended summer factory shutdowns this year at two plants that make the Chevrolet Malibu and Cruze sedans.

Ford’s 2017 car sales, including Lincoln, are down 18.9% through August. Meanwhile, SUVs and trucks have posted 1% and 2.4% gains, respectively. GM, the largest U.S. automaker, has seen a similar trend. GMC, which only sells SUVs, pickup trucks and vans, is the only GM brand to increase sales so far this year.

The Ford Transit stands out among the company’s list of planned production cuts. The Transit is the top-selling commercial van in the U.S., though Ford issued a recall in June for 402,462 units due to a driveshaft issue.

Ford shares rose 7 cents to $11.79 in recent trading.