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Personal Finance
Ford Explorer sales fall
November 1, 2000: 2:24 p.m. ET

Ford sees 15-20% drop for popular S/UV due partly to Firestone recall
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NEW YORK (CNNfn) - A Ford sales analyst said Tuesday that when October figures are released Wednesday they will show a 15-to-20 percent drop in sales of the Explorer, Ford's best-selling vehicle, from the same period a year ago.

George Pipas told CNN the sales loss can be attributed in part to the lack of availability of the sport/utility vehicle because production was stopped at three assembly plants for three weeks so that tires would be available to replace those recalled by Firestone. Only one of the three plants produced Explorers.

Other factors that had an impact on Explorer sales, Pipas believes, were concerns about the tire recall, as well as consumer interest in the new Ford Escape, a smaller S/UV that just came to market, and consumers who are holding out for the new 2002 Explorer.

  graphic   
    Ford's headache
  • Explorer sales off 15%-20%
  • Special Report: Firestone Ford Recall
  •    
    Another factor could be inventory and production cutbacks as plants prepare to begin manufacturing the new Explorer.

    A 15 percent sales drop represents about 5,000 units, Pipas said.

    "I think that the sales drop is temporary," said David Healy, auto analyst at Burnham Securities. "Explorer buyers, or some of the buyers, may be buying Ford's new small Escape SUVs or waiting until the new Explorer itself comes out after the first of the year."

    Healy said a continuing 15-to-20 percent sales decline would be serious but he expects the downturn is temporary, and that the sales will pick up by year-end.

    Healy also said that Ford's third-quarter earnings are likely already to have been significantly affected by the Explorer-related tire recall and that the sales drop would probably not cause a bigger dent in the company's earnings figures.

    "I think the effect has already been felt on Ford's earnings because Ford and the other automakers book themselves in profits when they produce and ship the cars to the dealers," said Healy.

    In August, Bridgestone/Firestone and Ford recalled 6.5 million 15-inch models of its ATX, ATX II and Wilderness AT tires that came mostly as original equipment on Explorers, because of tread-separation problems.

    But Ford and Firestone internal documents turned over to Congressional investigators have led them to question whether the Explorer, with its high center of gravity, is prone to rollovers in the event of a tire blowout.

    Pipas said it is impossible to know for sure whether buyers had been scared off by the tire controversy because "We don't know what buyers would have done" had the recall not occurred. But he said it would make sense that some customers shied away from the Explorer because of the recall.

    Pipas said total Ford vehicle sales will be down 4-to-6 percent from Oct. 1999. Cars will be down between 9-and-10 percent and trucks, which include SUVs, will be "down a couple of percent."

    But he said overall SUV sales could end up being higher for the period.

    "Clearly, I think there's a bunch of factors out there, and probably we're talking about a year-to-year decline of 15 percent translates to 5,000 or 6,000 units," Pipas said.

    A spokeswoman for General Motors (GM: Research, Estimates), which will also release October sales figures Wednesday along with sales figures for Daimler-Chrysler, said "there is hardly any way Ford cannot be affected by this [recall] crisis," but added that GM SUV sales continue at a brisk pace.

    "With GM, I think overall you'll be looking at a 9 percent increase in October this year versus October last year in GM's light truck sales, and I think that their SUV sales will show an increase at least that big year over year," said Healy. "That's the good news."

    However, the estimated sales increase is based on the new rebate that GM has put into effect, said Healy. "Unless they follow up with increased or extended rebates in November, I think that GM's sales following October could show some declines."

    Shares of Ford (F: Research, Estimates) gained $1.12 to $26.25 in trading Tuesday, while shares of GM (GM: Research, Estimates) gained $2.25 to $62.13 on the New York Stock Exchange. Daimler-Chrysler (DCX: Research, Estimates) rose $1.57 to $45.90. graphic

      RELATED STORIES

    Special report: Firestone Ford Recall

      RELATED SITES

    Ford Motor Co.

    Bridgestone/Firestone


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