Ford shuts Mustang factory for a week after sales plunge

Ford Motor is shutting its Mustang factory in Michigan for a week after the iconic sports car suffered a 32 per cent sales decline in the US last month and was outsold by the Chevrolet Camaro for the first time in almost two years.

The second-largest US automaker idled the factory in Flat Rock, south of Detroit, to match production capacity with demand, Kelli Felker, a company spokeswoman, said in an e-mailed statement. The plant, which employs 3,702 workers and makes Mustangs and Lincoln Continentals, will resume production October 17, Felker said. Under the automaker's labor agreement, workers will be paid during the shutdown.

The idling may be a sign of the growing weakness of the US auto market, which had been a leading driver of economic growth. Automakers' monthly sales have been coming up short - though they beat expectations in September - and many analysts are now predicting the US auto industry won't match last year's record of 17.5 million cars and light trucks.

Mustang, which is among Ford's most storied nameplates, received a racy redesign two years ago on the car's 50th anniversary. That new look helped propel the Mustang past the Camaro in 2015 to regain its title as the top-selling sports car in America, which it had held for decades before General Motors redesigned the Camaro in 2010.

Camaro overtook Mustang last month for the first time since October 2014 on the strength of incentives that more than tripled last month to $3,409 per car, compared with an average discount of $2,602 on the Ford pony car, according to data from researcher JD Power obtained by Bloomberg.

"In terms of incentives, we're always going to be disciplined, but we'll be competitive as well," Erich Merkle, Ford's sales analyst, said in an interview. Ford has sold 87,258 Mustangs in the US this year, down 9.3 per cent, while GM had Camaro sales of 54,535, off 11 per cent, according to researcher Autodata Ford Chief Executive Officer Mark Fields has said the US auto market has plateaued and that showroom sales are weakening.

Ford began selling Mustang globally last year, and the factory produces versions with the steering wheel on both sides of the dashboard for right-drive and left-drive markets, Merkle said.

Production of the Continental is still increasing at the Flat Rock factory, Felker said. The automaker sold just 775 copies of Lincoln's new flagship sedan last month, its first sales since the automaker discontinued the car in 2002.

Until February, Ford also built the Fusion family sedan in Flat Rock. But as sales for that model flagged, the automaker consolidated production of the Fusion at it primary plant in Hermosillo, Mexico, Felker said. Fusion sales have fallen 9.1 per cent this year to 210,462 models.

With a slowing market for cars, Camaro's inventory rose to a 139-day supply at the end of August, said Jim Cain, a GM spokesman. The incentives, coming at the end of the 2016 model year, helped lower Camaro supply to 120 days, still twice what is consider an optimum inventory. Mustang supply rose to 89 days at the end of September from 71 days a month earlier.

The deals on the Camaro will cool off this month as GM rolls out the 2017 model, Cain said.

"We've been able to achieve some pretty significant increases in retail market share and transaction prices while keeping our incentives pretty disciplined for the calendar year," Cain said.

bloomberg