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Automaker idles Ontario plant building Freestar, Monterey to reduce inventory

(Photo)Ford's new Freestar is a key part of the automaker's drive to rebuild profits. U.S. minivan sales fell 5.3 percent last year.


By Eric Mayne / The Detroit News

Ford Motor Co.’s latest minivans — the Ford Freestar and Mercury Monterey — have stumbled out of the starting gate, prompting the automaker to idle a Canadian assembly plant where they are built to reduce swollen inventories.

Ford’s Oakville Assembly Plant in Ontario will temporarily cease production of the Freestar and Monterey for two weeks beginning Feb. 9. The Freestar is a replacement for Ford’s Windstar minivan, while the Monterey is all-new for Mercury.

The minivans represent a cornerstone of Ford’s latest efforts to rebuild revenues and profits with a barrage of new models. They debuted last fall in a market segment that is shrinking, but remains competitive. Ford is counting on the minivan’s third row seats that fold flat into the floor to be a major selling point and help recover customers that have defected to the Honda Odyssey and Toyota Sienna.

U.S. minivan sales slumped 5.3 percent last year as consumers continued to shift to crossover vehicles and SUVs. Overall, industry sales fell just 1 percent last year.

Separately, Ford and General Motors Corp.’s shares posted their biggest drop in at least six months Thursday over investors’ concern that interest rates will rise, cutting into U.S. vehicle demand and giving automakers less flexibility to offer zero-percent and other low-financing deals.

Ford’s shares fell 74 cents, or 4.8 percent, to close at $14.84 in New York Stock Exchange trading Thursday. GM’s shares dropped $1.75, or 3.3 percent, to $50.71.

Ford remains optimistic about the fortunes of the Freestar and Monterey, which didn’t arrive in dealer showrooms until late last year.

“We started sending units to dealers in a period which is not the minivan selling season,” said Ford sales analyst George Pipas. “November, December, January, February are slow sales periods for all vehicles. But for minivans, the seasonal sales curve is much like the sales curve for convertibles. It starts in the spring and continues on through the summer.”

Ford won’t mount a significant marketing campaign for the two new minivans until next month, Pipas said.

Analysts say it’s smart move.

“It’s really just poor timing because the Quest came out and the Sienna came out and there has just been an absolute bombardment of advertising on those,” said Rebecca Lindland, senior analyst with Global Insight, referring to new minivans from Nissan and Toyota that reached the U.S. market before Ford’s offerings.

In a related move, GM said slow sales will result in a one-week shutdown of its minivan plant in Doraville, Ga. The plant, which builds the Chevrolet Venture, Oldsmobile Silhouette and Pontiac Montana, will temporarily halt production Monday.

For some automakers, the minivan segment remains healthy. DaimlerChrysler AG’s Chrysler Group has scheduled overtime at its primary minivan plant in Windsor, Ontario.

“The minivan is definitely going to survive because it does have a niche in the marketplace,” Lindland said.

While automakers are counting on new car and truck sales to rebound in 2004, growing supplies of some models are forcing automakers to idle other plants.

In addition to the minivan plants, GM and Ford plan to idle four other North American factories for at least a week in February to help clear unsold cars and trucks from dealer lots.

GM will idle a small pickup truck factory in Linden, N.J., as well as output of the Saturn Ion in Spring Hill, Tenn.

In coming weeks, Ford will temporarily close its Wayne plant that makes Focus small cars and a Cuautitlan, Mexico, factory that builds small cars and pickup trucks.

The moves will idle nearly 12,000 workers at the two automakers.

Bloated inventories

Automakers prefer to keep enough cars in stock and on dealer lots to last 65 days. Select cars and light trucks with high inventory levels at the end of December: Model Days supply

Mercury Monterey minivan 230
Volkswagen Beetle 196
Pontiac Vibe 159
Ford Ranger pickup 136
Buick Rainier SUV 133
Ford Freestar minivan 131
Pontiac Aztek 125
Dodge Dakota pickup 127
Saturn L series sedan, wagon 119
Buick LeSabre sedan 118
Chrysler Concorde sedan 91
Saturn Ion small car 89
Ford Focus 83
Honda Civic 73

Source: Ward's
 
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