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Ford idling Michigan Assembly Plant to trim Focus, C-Max supply

Ford will be putting the brakes on production at its Michigan Assembly Plant in Wayne, MI, idling production during the weeks of October 28 and December 16. Ford is citing the first drop in US sales in 27 months, a 4.2-percent dip in September, as the impetus for trimming their supplies, according to Automotive News.
Ford's deft management of its supplies has been part of its success over the years, and seeing supplies of Focus and C-Max, the two vehicles built at MAP, rise from 58 and 108 days, respectively, to 71 and 122 days over the span of a month was apparently all that was need to justify the trimming. As AN points out, the rule of thumb for many automakers is to maintain a 60-day supply of vehicles.
"Ford has been focused on keeping their pricing in check. Their operating margin is in double digits. Nobody else is there and they're obviously very proud of that," Alan Baum, an auto analyst with Baum & Associates told AN. Keeping the supply chain operating smoothly and not increasing supplies too much is crucial to that healthy profit margin. After all, a large supply lowers prices ,which, in turn, cuts profit. So while this news might not be great for employees at MAP, who now have an extra two weeks of vacation time, it's far from a sign of problems in Dearborn. Quite the opposite, actually.

Pickup prices rising at 2x industry average

We've said it before, but bears repeating: Pickup trucks are the financial engines of America's automakers. Good thing, then, that the segment is in rude health - in fact, Automotive News is suggesting that pickup truck sales are arguably healthier than they were pre-recession, even though the segment's volume is still significantly down from where it was before the bottom fell out of the US economy. That's because per-unit profits on full-size trucks are skyrocketing, outpacing the industry's average price increases by more than double since 2005. According to data from Edmunds, the average transaction price of a full-size pickup is now $39,915 - a heady increase over the $31,059 average price in 2005 - a gain of over 8 percent after inflation is factored in.
Just how important are trucks to automakers' bottom lines? Automotive News quotes a Morgan Stanley analyst as saying the Ford F-Series is responsible for 90 percent of the company's 2012 profits, and General Motors isn't far behind, with the Chevrolet Silverado and GMC Sierra twins chipping in about two-thirds of the automaker's earnings.
Automotive News points out that Detroit's automakers now have the money to invest in modernizing their full-size truck offerings, in part because they don't have the same overhead and legacy costs that pushed General Motors and Chrysler into bankruptcy. Certainly, the pickup segment has seen a lot of innovations as of late, including turbocharged V6s, coil-spring rear suspensions and active aero. Those improvements in important areas like fuel economy and ride comfort have given existing pickup buyers new reasons to upgrade. In addition, automakers are piling on the tech and luxury goodies, creating more and more high-content, high-profit models like the Ford F-150 King Ranch, Ram 1500 Laramie Longhorn and Chevrolet Silverado High Country (shown).

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