Ford committed to new products and cost cuts: CEO

LAS VEGAS Thu Jan 8, 2009 11:23pm EST

1 of 4. Ford Motor Co. President and Chief Executive Alan Mulally shows off his cellphone during his keynote address at the annual Consumer Electronics Show (CES) in Las Vegas, Nevada January 8, 2009.

Credit: Reuters/Rick Wilking

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LAS VEGAS (Reuters) - Ford Motor Co is committed to maintaining investments in new products such as its Sync audio platform as well as production cuts forced by the global economic downturn, Chief Executive Alan Mulally said on Thursday.

The Sync wireless system, which connects mobile phones and digital music players using voice commands, has been a surprise hit for Ford, helping to boost U.S. sales of its Focus compact car and appeal to younger buyers.

"The most important thing is to keep investing through this tough economy," Mulally told Reuters on the sidelines of the Consumer Electronics Show in Las Vegas. [ID:nN05368327] "That's why we are showcasing Sync, especially with the younger consumers who are buying smaller vehicles and moving up."

Ford, the No. 2 U.S.-based automaker, has introduced new Sync features at CES such as traffic alerts, directions and news that would be free for the first three years. It plans to offer Sync globally in 2010 starting with Europe.

Sync, developed with Microsoft Corp, is a voice-command activated system that can be upgraded by the user. Ford also has a new agreement with Best Buy Co Inc to provide technical support for the system.

"This has really been a differentiator for Ford," he said of the system Ford and Microsoft introduced at CES in 2007.

Ford's U.S. sales fell about 20 percent in 2008 as the economy faltered, and it posted $8.7 billion in losses through the first nine months of last year as the downturn pushed U.S. auto industry sales to the lowest level in 16 years.

"We think that the economy is going to continue to contract, at least in the first two quarters," Mulally said. "Our business really goes with economic development and the only thing we're very concerned about is credit and consumer confidence."

The industry will see signs of a recovery toward the end of 2009, but real recovery is not expected until 2010, he said.

Ford has been in a long-term restructuring that includes thousands of job cuts and other reductions as market share losses have left it with too much capacity in North America.

"We have been taking tough action to match production to actual demand," Mulally said, adding that investing in new products is the second part of the turnaround strategy.

Ford has not sought emergency government funding, but has said that it would seek access to a $9 billion line of credit as insurance against an even deeper decline in the economy.

Sync is a $395 option on many Ford vehicles. The system was developed to allow for upgrades along the consumer electronics cycle where new products are introduced every few months, rather than the five-year vehicle production cycle.

Ford is also working on improving voice recognition for the interior systems that would make the interaction between the user and the controls more conversational.

Automakers are engaged in fierce competition to provide advanced electronics features to distinguish their vehicles, such as navigation and emergency assistance services.

Toyota Motor Corp plans to introduce an in-house developed onboard communications and navigation system in the U.S. market this year on some vehicles. That system includes features that would compete directly with General Motors Corp's market-leading OnStar service and Ford's Sync system.

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