Ford Announces Plans to Stop Focus and C-Max Production to Trim Supply
Ford Motor Company will idle the production process at their Michigan Assembly Plant in Wayne, Michigan twice over the next few months – first during the week of October 28th and again during the week of December 16th. Inventory levels in the auto industry are measured in days of supply and the industry standard for normal vehicles (like the Focus) is a 60 day supply so for example, with Ford selling around 17,000 Focus sedans and hatchbacks per month, a 60 day supply would be in the range of 35,000 units. However, Ford currently has a 71 day supply of the Focus while the C-Max has a 122 day supply in stock so the company will temporarily cease production to get those inventory levels back around (or under) the 60 day supply figure.
It should be noted that the 60 day supply guideline doesn’t apply as much with the niche market C-Max Hybrid and C-Max Energi as it does with a big seller like the Focus but in any case – Ford has more Focus and C-Max models waiting to be purchased than the management likes so a couple week-long downtime sessions will help Ford trim the supply as we get into the thick of the 2014 model year. Ford’s decision to trim the supply of these two models is based more on the industry sales trends than their own as while the industry is down a bit – Ford is up by 12% year to date.
Idling a plant like this is a very normal part of the automotive business and it is common practice to stop production for short periods of time to help reduce the number of Focus and C-Max units waiting to be sold. Critics of the Ford brand will use this announcement as ammunition to claim that the company isn’t doing well since they need to stop production of such a popular model (the Focus) but in the past, companies who have avoided temporary production shutdowns to avoid the bad press have found themselves sitting on massive quantities of vehicles that they cannot sell in a reasonable amount of time. In other words – Ford stopping production of the Focus and C-Max next week and then again in December will help the Motor Company keep their inventory levels in a more reasonable range. After all – the critics will also begin to complain if Ford has too much inventory sitting on lots around the country.
Refuting the claims that this downtime comes due to any sort of struggle with Ford Focus and C-Max sales are this year’s sale numbers for the two compact models. Ford has sold 188,654 Focus sedans and hatchbacks over the first 10 months of the year for an improvement of 1.1% while the relatively new C-Max Hybrid and C-Max Energi have improved by a stunning 2,800% compared to the first ten months of 2012.
Source: Automotive News