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Executives

Erich Merkle

Ken Czubay - Vice President of US Marketing Sales & Service

Jenny Lin

Analysts

Brian Arthur Johnson - Barclays Capital, Research Division

H. Peter Nesvold - Jefferies & Company, Inc., Research Division

John Murphy - BofA Merrill Lynch, Research Division

Rod Lache - Deutsche Bank AG, Research Division

Timothy J. Denoyer - Wolfe Trahan & Co.

Ford Motor Company (F) Monthly Sales Call June 1, 2012 10:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Ford Monthly Sales Call. My name is Carissa, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I will now turn the conference over to your host for today's call, Mr. Erich Merkle, U.S. sales analyst. Please proceed.

Erich Merkle

Thank you, Carissa. Good morning, everyone, and thank you for joining us today on Ford's May 2012 sales call.

Based on initial results from what we've seen, we believe that May's SAAR came in, in the "mid 14 million vehicle" range, and this would include medium and heavy trucks. This would provide us with a calendar year-to-date SAAR that we estimate would be in the "high 14 million total vehicle" range. Both the monthly SAAR and calendar year-to-date continue to run at levels above last year, when industry SAAR was running in around the 13 million vehicle range. In absolute terms, we project that total vehicle sales, again, including medium and heavy trucks, finished the month at approximately 1.4 million, a year-over-year increase of what we estimate at about 27%. You'll remember that last year, May was heavily influenced by inventory restricted sales due to the Japanese earthquake and tsunami.

A few additional observations on the industry as we moved through the month of May is that we found that small cars continued to hold their share again this month at approximately 24% of the overall industry. This number has been very consistent over the last 4 months. Full-size pickups, as a percent of the overall industry, are running consistent with last month at about 10% of the industry. But to provide you with some additional color and some details around Ford's performance, I'd like to turn things over to Ken Czubay. Ken?

Ken Czubay

Thank you, Erich, and good morning, everyone. Ford Motor Company sales totaled 216,267 vehicles in May, representing a 13% increase over year-ago levels. Erich mentioned truck sales in May, so let's start there.

Truck sales at Ford were up 21% in May, with 75,108 trucks sold during the month, and our growth involved more than F-Series. Econoline was up 31% for the month, with 14,160 vans sold. This was the best May Econoline performance since 2008. Transit Connect saw its best sales month ever with 3,937 vans sold. This represented a 53% increase versus a year ago. And for F-Series, we sold 54,836 pickups last month, providing a 29% gain over last year. Last month represented the best May results for F-Series since 2007, and actually, that's been the case all year long. Calendar year-to-date, our F-Series is up 31,700 trucks, 15%.

Now last month, EcoBoost represented -- excuse me, last month, EcoBoost-equipped F-150s represented 43% of retail F-150 sales. Total EcoBoost-equipped F-150 sales through May of this year are up 153% over the same period last year. This continues to be a very strong competitive advantage for us in the full-size pickup segment as it offers not only best-in-class fuel economy, but with over 420 foot-pounds of torque.

Now utility sales at Ford totaled 61,271 vehicles, representing a 12% increase over last May. Sales of Explorer continued to grow. In May, sales increased 10% with 14,662 vehicles sold. This represents the best-ever sales month for the current Explorer since the new model reached dealerships in December of 2010. Year-to-date explorer sales were up 11%. Edge sales increased 24%, with total sales of 11,749. Year-to-date, we have seen an increase of 10% in our Edge business. In May, we began our first sales of the 2013 Escape. May also marks our second-best retail sales month ever for the Ford Escape since its launch in 2000.

Now let's move over to passenger cars. Fusion powers on, again producing another record. Last month was the best May on record for the Fusion, with 26,857 vehicles sold. On the retail side, Fusion sales were the best of any month on record, a strong finish for this model as we approach the introduction of the all-new Fusion this fall.

Let's take a look at Focus. Sales totaled 24,769 vehicles last month, providing an 11% gain over May of last year. Our strongest state for Focus sales in May was California. In Southern California, our L.A. region, it was up 39%, while San Francisco, it was up 50%. The Focus along with Fiesta together have taken our small car share in California to 6%, which has doubled in 2 short years.

Mustang also had a strong month. Sales were up 58%, with 10,427 Mustangs sold, a strong start for the 2013 Mustang. As a side note, we also delivered the first Focus Electric vehicles to retail customers in the last few days of May.

Overall, you can see our sales makeup is very balanced, with sales gains and a number of record results coming from our nameplates in cars, utilities and trucks. We're appealing to consumers that place value on fuel efficiency, performance and technology. In fact, nearly 1/3 of Ford vehicle lines in the U.S. will feature a model with 40 miles per gallon or more this year, a claim no other full-line automaker can match. That's a detailed look at May sales.

Now here's Jenny Lin to update us on the U.S. economy. Jenny?

Jenny Lin

Thanks, Ken. Good morning, everybody. Since our last monthly sales call, over the last 30 days also, the economic indicators came in just a little softer than the first quarter. Manufacturing sectors are still expanding, albeit at a slightly slower rate, and housing sector has shown some signs of improving, while improvement in the labor market has been modest since April. However, on mix, this is still consistent with our outlook for the U.S. economy to grow in the range of 2% to 2.5% this year.

Here are some details. In May, consumer sentiment was up by nearly 3 points to 79.3, with brighter assessment for current conditions and outlook. This is the ninth consecutive month of rising sentiment since the low of 55.8 in last August. Good time to buy a vehicle index improved by 1 point to 64% in May. There are some encouraging signs also from the housing market recently despite the fact that it is -- all level of status remains defective [ph]. Housing improvement rose by 27% during the first 4 months, while housing starts are up by about 25%, with strength in monthly family unit [indiscernible]. New home sales were up by 16% and existing home sales up by 7% between January and April. Retail price of unleaded gasoline continued to trend down through May. At the beginning week of May, the national average gasoline price was at about $3.80 per gallon. As of this week, it is at about $3.67 per gallon, as many of us have observed. This is, of course, a good news for the consumers.

The May Manufacturing Purchasing Managers Index, PMI, released today, is at 57 -- at 53.5%. This is only a 1.3% -- 1.3 points decline from April. This moderation is actually consistent with the recent reading of indicators such as capital goods orders that have already suggesting a slowing pace of manufacturing expansion. Despite that, 13 out of 18 manufacturing industries are reporting growth.

On the software side, labor market indicators are showing some softening since March. Unemployment insurance claims averaged at about 375,000 in May after some improvement in the initial week in May. Today, the employment report came in soft as well. The economy created 69,000 jobs during May, with unemployment rate ticked up at 8.2% due to increase in labor force participation and the labor force itself. In all, as I've said earlier, that this is consistent with our outlook for the economic growth to be around 2% to 2.5% gains this year.

To recap, as Ken and Erich pointed out earlier, the U.S. new vehicle industry sales in May were estimated at mid-14 million unit range as the seasonally adjusted annual rate, including medium- and heavy-duty trucks. Our present call for the full year industry sales is in the range of 14.5 million to 15 million units, consistent with the industry performance during the first 5 months of the year.

With that summary, let me turn it back to Erich.

Erich Merkle

Thank you, Jenny. I'm going to go through a few housekeeping items, as we do every month, starting off with taking a look at our gross stock. For cars, in the month of May 2012, cars were 137,000 in gross stock, trucks were 188,000, utilities were 123,000, giving us a total gross stock of 448,000 vehicles. The daily -- our days supply translates to 54. Last month for April of 2012, we had 143,000 cars, 188,000 trucks, 145,000 utilities, giving us a total of 476,000 vehicles, translating into 66 days' supply. When we compare that to -- when we compare -- look at May of last year, May of 2011, we were at 103,000 cars, 186,000 trucks, 108,000 utilities, giving us a total of 397,000, translating into 52 days' supply.

Now in terms of our production guidance for the third quarter, our guidance for the third quarter, we have a total of 690,000 vehicles that we are guiding towards for the third quarter. This is comprised of 229,000 cars, 216,000 utilities and 245,000 trucks. This gives us a year-over-year change compared to the third quarter of 2011 of a minus 3% on cars, a plus 12% on utilities, a plus 7% on trucks and a total increase of 5%.

Turning now to our mix. In the month of May 2012, 35% of our sales were fleets. Of that, 14% were commercial, 5% were to government and 16% were to daily rental. This compares to last year, our fleet was 34% of total sales, with 14% commercial, 6% government and 14% daily rental.

So with that, I would like to turn the call over. Carissa, could we start taking some calls from our analysts, please?

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Brian Johnson of Barclays.

Brian Arthur Johnson - Barclays Capital, Research Division

Just maybe focusing in on these results in the industry, vis-à-vis the rather weak nonfarm payroll, I mean, what's your sense of and what are you hearing for dealers, whether the employment numbers really matter for keeping it in the mid-14s or whether even with kind of tepid economic growth, we can expect this type of SAAR going forward?

Jenny Lin

Okay. This is Jenny here. Let me answer the first part of your question regarding employment. We think that we are seeing some soft patch in terms of employment. And as you know, that May, June could be a pretty noisy time to read through because of the graduation, the season has come. So actually, a good news in that report is that labor force participation improved, and also the labor force actually increased by 642,000. That means people are returning to the labor market, so it is actually a good sign, although the unemployment rate ticked up just a little bit. So I think that's all we can say at this point. Of course, we continue to watch that very carefully as we develop.

Ken Czubay

Brian, this is Ken. Let me give you some texture from the dealers. I was out with dealers last week and this week, and I do not believe that the employment data in and of itself will have an impact, as Jenny mentioned. The dealers are telling me that they had excellent traffic, particularly over Memorial weekend, and interest is keen on our cars, utilities and trucks. There's substantial pent-up demand in the marketplace, and consumers still seem intent on trading into more fuel-efficient vehicles, taking advantage of low interest rates and taking advantage of a strong used car market. I was in California, and the price of gas was $4.25, $4.35. And they are very interested in our fuel-efficient vehicles.

Brian Arthur Johnson - Barclays Capital, Research Division

And within the month, any evidence on construction, new housing starts in the F-Series? I know you are optimistic for kind of the remainder of the year, but it was a pretty disappointing construction employment number.

Ken Czubay

I can't directly correlate the construction. Our F-Series and our trucks in total had a very good month, and that is fueled by well over 50% of the truck UIO is over 10 years old. And the truck owners are saying, "Rather than repair, I can get the substantial savings in fuel economy, especially with EcoBoost." And they're trading into the new trucks. So we can hardly wait until housing kicks in. But frankly, we were very pleased with our overall truck business, as I mentioned. Econoline, Transit Connect, F-Series, we were very pleased with that.

Brian Arthur Johnson - Barclays Capital, Research Division

And just final quick on -- following up on that. Is there any rule of thumb for the trade-in cycle for a pickup truck owner, kind of what it used to be and how they've stretched it out?

Ken Czubay

Well, they've stretched it out longer. There isn't necessarily a rule of thumb, because you comingle now more commercial use than you had third-vehicle luxury use. But clearly, all evidence points to an aging of the truck fleet, which is going to ultimately demand that we're going to sell a lot more Ford trucks.

Erich Merkle

And Brian, I would just add that it is -- the age of the pickup -- or the truck population is the highest we've ever seen it, so like that of cars.

Operator

Your next question comes from the line of Peter Nesvold of Jefferies.

H. Peter Nesvold - Jefferies & Company, Inc., Research Division

So Erich, you were quoted on Bloomberg yesterday talking about pickup trucks sales plateauing. And I was just hoping -- frankly, I only really saw the headline because there was so much going on yesterday. I was hoping you can add a little context to that, because certainly the strength in the month, I mean, it was a really terrific month for pickups. By the comment, did you mean it was plateauing at the level out of this month? Or was there other context to that question I should be aware of?

Erich Merkle

No, no. Yes. Essentially, what I was referring to is that, in my opening comments, I talked about pickups. Full-size pickups is running about 10% of the total industry right now, and that was pretty consistent with last month. So we think that there's a bit of a base that has been found with the full-size pickup truck segment. Keep in mind that, as you know, higher fuel prices and also seasonality impact that 10% number as a percent of total industry. So in the spring and in the first half of the year, you'll generally see that percentage a little lower, with pickup trucks performing better in the second half of the year.

H. Peter Nesvold - Jefferies & Company, Inc., Research Division

Got you. Okay. So if you dumb it down to my level, which we frequently need to do, plateauing means essentially bottoming out as a percent of the SAAR.

Erich Merkle

Bottoming out or a base. Yes, correct.

H. Peter Nesvold - Jefferies & Company, Inc., Research Division

And then my follow-up question, any commentary around Memorial Day sales? How did the timing of Memorial Day this year impact the sales cadence? How are sales in the last week of the month? And that's it.

Ken Czubay

Peter, this is Ken. And Memorial Day sales for us were very good. It's a little bit regionalized. They were extremely strong in California and strong in the southeast part of the United States. And the pace continued into the Tuesday, Wednesday, Thursday period, so very strong in California. We continue to see good growth. Like I said, we have some of our small vehicles with fuel efficiency -- are just people are trading in vehicles that our dealers haven't seen in a while on the great, new products.

Operator

Your next question comes from the line of John Murphy of Bank of America Merrill Lynch.

John Murphy - BofA Merrill Lynch, Research Division

I actually got a follow-up also, similar to Peter's, on some of your comments from earlier this week that came through in the press. And you talked about increasing your incentives sequentially in May versus April, yet you keep talking about being very short of inventory, which is fairly obvious, given the numbers you're giving us. I'm just trying to understand how we should square those 2 comments. If you're short of supply, why you would increase incentives, and there's something that's more targeted in a specific segment or something that we're missing?

Ken Czubay

Well, John, this is Ken. You honed right in on the answer. We targeted on the Escape, which is in its balance-out. We have just started shipping in the last 10 days the new Escape to our dealers. They're very excited about that. But our incentive increase was focused on the balance-out of the Escape. And we have 2 products that we will match our incentives to our balance-out plan. But it was, by and large, singularly focused on the Escape vehicle.

Erich Merkle

And John, for our incentives per vehicle, that was approximately $100. So to say it's not significant, and a lot of that was targeted, as Ken just said, directly on Escape as we transition and do a run-out of the 2012.

John Murphy - BofA Merrill Lynch, Research Division

That's very helpful. And just the second question is as we look at the Fusion and its strength in its final months of its current model and we're going to see the new model launch late this year, it's similar to what we saw on the Escape. And in its last 6 to 12 months of its life, it was incredibly strong. Is there anything going on that you're doing at the end of these model life cycles as far as incentives or fleet? Or is this just a carry-through of just good product and the dealer just selling?

Ken Czubay

Well, it certainly is a result of great products that the dealers are selling, John, but we do focus on that. We have a plan to have a balance-out as we go through the end and as we launch in the fall the new Fusion. So this is our plan, we match it. We match the incentives to the inventories and the glide path, if you may, on these vehicles. But the consumers are recognizing that current model Escape is a great vehicle, the current Fusion is a great vehicle. And we just want to make sure we have a seamless transition into the new models. And it's retail-driven, it's not fleet-driven.

John Murphy - BofA Merrill Lynch, Research Division

Okay. And then just one last question on the truck sales that have been particularly strong in the last couple of months and in May. I do see a big spike-up in your conquest rates, particularly on the pickups, on the F-Series with the EcoBoost engine? Just curious what that has been historically, which I don't think it has been all that high, if that's increased dramatically with the EcoBoost engine more recently?

Ken Czubay

I don't have the exact numbers on conquest, John, but dealers are telling us that they are seeing consumers come in with trade-ins that they haven't seen before. And it's driven by the fuel economy. I mean, first off, the F-Series is the best-selling vehicle for 30 years, so there's an incredible amount of notice in the marketplace. But you add that momentum to the great strides we've made on fuel economy, and it's across the country. In certain parts of the country, like Texas, where fuel's a little lower than others, we are seeing very strong demand in trades we haven't seen before, driven by the performance and the vastly improved miles per gallon.

Erich Merkle

We'll take one more from analyst community, if we could, and then we'll move over to the media, please.

Operator

You have a question from the line of Rod Lache of Deutsche Bank.

Rod Lache - Deutsche Bank AG, Research Division

I was wondering whether you had a preliminary estimate for the retail SAAR and where your retail market share is tracking now. And are you still of the opinion that there are some segments here where your inventories are constraining your performance there at retail?

Erich Merkle

Yes, we don't. In terms of the share, Rod, everyone isn't in yet, so we're not going to make any assumptions there. But in terms of the industry, in terms of retail, so fleet, the mix, it was probably about 80-20, which is pretty standard. So that's what we saw.

Ken Czubay

And Rod, this is Ken. With regard to constraints of inventory, yes, we have. I mean, our plants are running flat out. We've talked to everyone about our production increases this quarter and for the balance of the year. But on some of the very high-demand products, we could have sold more. But we're working on that.

Rod Lache - Deutsche Bank AG, Research Division

You've commented on some strength that you're seeing market-wise, market-wide, rather, for the small car segment and the large pickups. There's a lot of competition coming into the mid-car area, and you guys as well are increasing your capacity for the new Fusion. Are you sort of, of the opinion that that's a category that's likely to expand sufficiently to absorb some of the additional capacity that's coming on there or are some of the actions that you're taking basically just very Ford-specific?

Erich Merkle

Yes. In fact, this is something that I commented on a briefing a little while back. But, Rod, as you see, the cycle cadence really pick up. For instance, last year, we saw a tremendous cycle cadence in the small car or in the compact car segment. This year, though, there's a tremendous amount of activity, as you just pointed out, in the mid-size sedan segment. So as everybody gets their legs under them and the transitions happen throughout the course of this year, we would expect to see mid-size, the mid-size sedan as an overall percent of the total industry, improve as we go into next year. Keep in mind also with all the strides that are being made in fuel economy on the mid-size sedan, for instance, our Fusion looking at 37 miles per gallon with the EcoBoost and you're looking -- on the highway, then you've also got the hybrid out there, which is 47 miles per gallon in the city. So you're seeing that delta between compact and mid-size cars really shrink for the next year.

Ken Czubay

And what I would add, Rod, is our projections are in the nonluxury market, that B, C, CD and small utility, because it's important to recognize the high degree of cross-shop that they'll represent about 60% of the market as we go forward. And our dealers, with the launch of the new Escape and then the launch of the new Fusion in the fall, are going to be very well positioned to take advantage of that market growth. So we're very excited that our products will meet the improved segmentation, as you pointed out.

Rod Lache - Deutsche Bank AG, Research Division

Just lastly, what is the category or categories that, that growth is sort of pulling from? As you get that growth in B, C and CD, what do you expect to be the segments that shrink?

Ken Czubay

I don't know that -- well, on a percentage, it's a zero-sum game. But I think it will be just the growth in the attraction to the improved fuel economy, the improved technologies. I mean, it'll be giving people what they want, and those will grow. I think there may be some out of some of the others, on the share point of view, some of the mid-size cars that -- so it'll be the numerical growth fed by products that people want.

Erich Merkle

Carissa, if we could turn it over to the folks in the media and start taking questions from them, I'd appreciate it.

Operator

[Operator Instructions] And your first question will come from the line of Dee-Ann Durbin of the Associated Press.

Dee-Ann Durbin

I just wanted to know about a little bit about pent-up demand. I think the last time I had asked about this, I was told that pent-up demand could really continue all through this year and possibly into next year. And I'm just wondering if you can kind of give me an update on how strong it is, how long we'll continue to see it and is it really sort of pushing by. Is it so strong that it sort of pushes aside all these other softer economic factors?

Jenny Lin

Well, Dee-Ann, this is Jenny here. Yes. To answer your question, yes, so far, the industry recover mostly due to pent-up demand. But we do have a better economic indicators when you compare to last year. So economic performance, it has improved, even though it's not as bad as what we would expect -- as good as what we would expect earlier. However, the economic improvement continue, and on top of it is the pent-up demand, because we have gone through a tremendous business cycle over the past last few years. And then the delay scrappage now has come back to take advantage of the reviving of the housing sector, for example. And like what Ken had pointed out, the truck has grown. The average age of the truck is now 10.4 years. With cars, average age of the cars is about 10.8 years, according to Polk data. So that should keep us going for quite a while.

Operator

Your next question comes from the line of Mike Ramsey of Wall Street Journal.

Michael Ramsey

The question I had was the F-Series sales, kind of eye-poppingly large. I think last year, in December, you had 68,000, and that was huge, 75,000 for May. I know those seem like numbers not seen since the mid-2000 housing boom. Are you starting to -- is the housing having an impact on -- the housing gross building permits, can you tell if that's having an impact? Or is it just like we were discussing the pent-up demand? Can you talk about that?

Ken Czubay

So Mike, I sure can. This is Ken. First off, the F-Series trucks were 54,800. And when we talk cars, utilities and trucks, that includes vans, et cetera. But I do want to say that, as we pointed out in the previous answer a moment ago, there is a cycle of truck sales, and they and their share increase as the year progresses, generally at their high point in December. So you were absolutely right on about F-Series sales in December. For us to be over -- almost 55,000 F-Series, it was a strong month for us. And I mentioned before, I don't think it's necessarily housing-driven, because the housing data doesn't support that, so we're eagerly awaiting the rebound in housing. I think, as Jenny just pointed out in her general comment a moment ago, that it's fueled by replacement, pent-up demand of the age of the fleet, coupled with the desire to have trucks that get greatly improved fuel economy. Jenny, did you have a point to add to that?

Jenny Lin

Yes, I just wanted to make some corrections over the numbers that I cited a minute ago. The passenger car average age is 11.1. I meant to say that the total light vehicle average age is 10.8 years. Anyway, it's all very high.

Operator

Your next question comes from the line of Keith Naughton of Bloomberg.

Keith Naughton

I wanted to ask about 2 vehicles, the Mustang and the Escape. Let's start with the Mustang. It had a very good month. It actually outsold the Camaro. I'm wondering if you did a lot of fleet business, maybe daily rental. Or what drove the 58% increase?

Ken Czubay

Well, first off, on Mustang, we had a strong increase on the retail business, and it was driven by the '13 model that's now available across the country. We're very pleased with that. So we had an increase in fleet business, but it was mainly driven by retail business. Everybody's really excited about the '13.

Keith Naughton

Okay, great. And then on Escape, you said that in the last 10 days, you've started delivering the new one. I'm wondering what percentage of those 23,000 Escape sales were the new one and how much were just the old one.

Ken Czubay

It was a very small percent. They're released from the center of the country, and they're starting to be driven across the country. So it was less than 1,000 vehicles.

Keith Naughton

Okay. And are you being impacted in any significant way by the vehicles that were damaged in Louisville?

Ken Czubay

Well, we would've preferred that they not be hail-damaged, but no retail customer will get the hail-damaged vehicles.

Erich Merkle

They're not being shipped, so...

Operator

Your next question comes from the line of Alisa Priddle of the Detroit Press.

Alisa Priddle

Just wanted to check on the production increase in the third quarter. So it seems it's all truck and utilities and actually cutting back on cars. We're just hoping you could elaborate a little bit on what's going on there and why it's the mix that it is.

Erich Merkle

Sure. If you look at what's happening in the fall, we are launching a number of new products as we move throughout the year, none of which is -- which we can't forget about the Fusion. So in the fall, as we've talked to many folks many times, 2013 Fusion. So we do have some scheduled time built in there for that transition to take place.

Ken Czubay

That'll be the transition of the Fusion plant.

Alisa Priddle

So most of it is the downtime for the changeover?

Ken Czubay

Yes.

Alisa Priddle

Okay. So there's no other sort of car. You're not seeing that trucks are going to outsell cars more in the third quarter or anything? This is just strictly logistical?

Ken Czubay

Yes. We are full-speed ahead on truck production -- excuse me, I meant car production. We are full-speed ahead on all production, but we are full-speed ahead on car production.

Erich Merkle

Yes. So it's really across the board, Alisa. We are looking -- we're transitioning over to Fusion and that's what's creating that little discrepancy. But it has nothing to do with the market, so...

Operator

And your next question will come from the line of Todd Lassa of Motor Trend.

Todd Lassa

Yes. I wanted to clarify what you've been saying about trucks this morning. While you had a good month for F-Series, you're saying that the share of U.S. sales is about 10% over the last couple of months?

Erich Merkle

That's correct.

Todd Lassa

And that's down from about, I think, about 12% in the last couple of years...

Erich Merkle

Todd, it's 10% of -- the full-size pickup truck is 10% of the industry, the full-size pickup truck segment.

Todd Lassa

No. Yes, I understand, right. You're talking about pickup trucks in general. Sure, understood. But that is down as a share, not only from post-'09, but pre-'09, it was about 14%. Then '07, it was [ph] about 12%. Do you expect that 10% to remain steady through the rest of the year? And could you talk about what's happening there, just in the segment in general, since you basically own the segment?

Erich Merkle

Yes. If you take a look at where we're at with the 10% right now, it is consistent with where pickup trucks as a whole, as a percentage of the industry, were at this time last year. So what generally happens is you'll see an improvement as we move into the second half of the year in terms of the percent of the overall industry. Pickup trucks are seasonal. They do tend to have a stronger finish in the second half than they do in the first.

Todd Lassa

Okay. All right. And no effect from -- I know with the stimulus program the last -- that was through '09 basically, that, that helped pickup truck sales. And no loss from that having trailed out at all or...

Erich Merkle

No, we don't believe so.

Operator

You have a question from the line of Tim Denoyer of Wolfe Trahan.

Timothy J. Denoyer - Wolfe Trahan & Co.

Just a quick question on the 3Q production guidance. I think you had talked about -- can you -- or actually let me phrase it this way, can you walk through how some of the shift additions are going to be ramping up? I think you talked about 4 plants. I believe It was Kansas City, Michigan Assembly, Chicago and Louisville who are adding shifts this year. Can you walk through some of the timing on when that happens and how that affects third quarter?

Erich Merkle

Sure, sure, we can do that. Well, I'll just go through what we have for the year. We have a Louisville Assembly Plant. It added a full second shift with 1,800 employees during the first quarter of 2012. And then it'll also add, as production ramps up of the all-new 2013 Ford Escape, their third shift, about 1,300 employees during the second half of the year. So it'll be a third shift in Louisville. We'll add second shifts in Kansas City assembly in May, which is last month, it was done. Michigan Assembly Plant and Chicago Assembly Plant, both done in the month of May. So does that help clarify a little bit?

Timothy J. Denoyer - Wolfe Trahan & Co.

Yes. And in terms of the shortened summer shutdowns that you've talked about, I guess what I'm getting at is that I would've expected a little bit higher third quarter production on a year-over-year basis. But I guess, it's up 5% year-over-year. And with the combination of the shift increases and the shortened summer shutdowns, I guess the offsetting factor is really just the downtime for the Fusion. Is that the right way to think about it?

Erich Merkle

Well, you also have, when you start taking a look at we're adding this year 400,000 units of straight-line capacity by the end of the year. And Q3 is right in line with that plan.

Ken Czubay

But you're right. This is Ken. It's mostly driven on the downside by the changeover in the Fusion plant, like we've explained.

Erich Merkle

Okay. Carissa, we appreciate everyone's coming online today and joining us for the call. Thank you very much, and we're going to look forward to a great month and talking to everybody again in July.

Operator

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.

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Source: Ford Motor's Management Host Monthly Sales Call (Transcript)
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