DEARBORN, Mich., Aug. 18 — The Ford Motor Company said today that it would cut vehicle production by 21 percent in the fourth quarter, its steepest cut in more than two decades, because sales of its most important products, light trucks, are faltering.
Ford said it was abandoning its goal, reiterated as recently as April, of selling 900,000 pickup trucks a year in the United States. That could mean that the reign of Ford’s F-series pickup truck as the best-selling vehicle in America could be coming to an end after nearly a quarter-century.
The company said the production cuts were necessary because high gasoline prices were eroding sales of light trucks and sport-utility vehicles, which account for two-thirds of Ford’s sales, and that it could no longer hope for fuel prices to fall again.
“We know this decision will have a dramatic impact on our employees, as well as our suppliers,” Mr. Ford wrote in the message. “This is, however, the right call for our customers, our dealers and our long-term future.”
Ford Motor executives are trying to develop an expanded version of the North American turnaround plan that the company announced in January. The plan, called the Way Forward, called for the company to close 14 plants and eliminate 30,000 jobs by 2012 to streamline its operations and cut costs.
Ford is now looking at deeper cuts, on a swifter timetable than the original plan. It is expected to announce the additional steps in September.
General Motors is undergoing a similar effort to trim costs and turn around its North American vehicle business; it has said it will close all or part of a dozen factories and eliminate tens of thousands of jobs.
Ford’s announcement today that it would cut fourth-quarter production by 168,000 vehicles will have an immediate impact on its bottom line. Auto companies count vehicles as sold when they are shipped from the factory to the dealer, not when they are ultimately purchased by the consumer. Under this system, cutting production directly reduces the manufacturer’s potential for revenue and profits.Ford also said it is cutting back its production in the current quarter by another 20,000 vehicles, beyond the cutback of 40,000 vehicles that it announced in July. All told, the company now expects to build slightly more than 3 million vehicles this year. The F-series pickup alone accounts for about 30 percent of that total.
Following the announcement, two of the major credit-rating agencies, Moody;s Investors Service and Standard & Poor’s, said they were considering downgrading Ford, and a third, Fitch Ratings, lowered its rating of Ford by one level. All three agencies rate Ford’s debt securities well below investment grade.
Shares of Ford stock traded at about $7.98 at midday, down 19 cents from Thursday’s close.
Ford has not cut production this deeply since it underwent a financial crisis in the early 1980’s that nearly forced it to seek a federal bailout like the one Chrysler received.
“This action, difficult as it is, reflects an assessment of the marketplace that is conservative, and more aligned with the shift in customer demand,” Mr. Ford wrote in the e-mail to employees.
He went on, “As you know, an unprecedented spike in gasoline prices during the second quarter impacted our product lineup more than that of our competitors, because of the long-standing success of our trucks and S.U.V.’s.”
Like Chrysler and General Motors, Ford makes relatively little money on the cars it sells and depends heavily on pickups and S.U.V.’s for profits. By contrast, the major Japanese automakers still produce more cars than light trucks and make substantial profits on both, though they too have introduced more pickup and S.U.V. models in recent years.
Last month, Toyota surpassed Ford for the first time to become the No. 2 automaker in the American market, ranked by unit sales. (General Motors is No. 1.) Soon after that, Ford announced that it lost $254 million in the second quarter, on top of a $1.2 billion loss it reported for the first quarter.
Ford Motor also said today that it would reduce its spending on sales incentives like cash rebates and below-market financing. American automakers make much heavier use of such incentives than Honda or Toyota do, and tend to see sharper fall-offs in sales when they have been curtailed or withdrawn.
Under the revised production schedule, Ford Motor said it would temporarily shut down assembly lines in Michigan, Illinois, Minnesota, Kentucky and Ontario at various times between now and the end of the year.