Ford Motor Company May 2008 Sales Call Transcript

Ford Motor Company (F)

May 2008 Sales Call

June 3, 2008 1:00 pm ET

Executives

George Pipas – US Sales Analysis Manager

Emily Kolinski Morris – Senior US Economist

Jim Farley – Ford Group Vice President Marketing & Communications

Analysts

John Murphy - Merrill Lynch

Chris Ceraso - Credit Suisse

Brian Johnson - Lehman Brothers

Patrick Nolan – Deutsche Bank

Chris Woodyard – USA Today

Sarah Webster – Detroit Free Press

Bill Koenig – Bloomberg News

Jeff Bennett – Dow Jones

Presentation

Operator

Great day ladies and gentlemen and welcome to the Ford monthly sales conference call. (Operator instructions) I would now like to turn the presentation over to our host for today’s call, Mr. George Pipas.

George Pipas

Thank you. Thank you for your patience this afternoon everybody and welcome to our Ford conference call. Again, with me today is Emily Kolinski Morris, Ford’s Senior US Economist and Jim Farley, Ford Group Vice President Marketing and Communications. We’re going to begin with Emily.

Before we do I’d just like to mention two things. First of all, you will note on page 1 or at the top of the sales tables, we’ve provided some additional information about Ford, Lincoln and Mercury sales. Not only citing their sales by brand but also sales by product type with cars, crossover utilities, sport utility vehicles and our trucks and vans, mostly pickup trucks but also large vans and medium and heavy duty trucks, so that you can better see what’s happening in the month without adding up individual categories.

Secondly, there will be a couple of items right at the end of the call, one of which is a brief but important news item and we’ll do that once we close the Q&A. Emily, let’s update everybody on what’s going on in the economy.

Emily Kolinski Morris

Well certainly we’re all aware that the economic environment remains challenging but it has been consistent with the themes that we’ve been sharing in this forum in recent months. We’ve spoken of the pressures on consumers from higher energy prices and a weak housing market and those pressures continue to be evident in weak consumer confidence readings and in recent consumer spending data.

The housing market adjustment is well underway with home building activity that started moving down nearly 2.5 years ago. And price declines are now taking center stage to clear outstanding inventory but this is also taking a toll on household net wealth.

The most notable of the recent economic themes though must be the elevated level of uncertainty surrounding the outlook and its effect on consumers and businesses. For an illustration, let’s look no further than the gas pump and the unprecedented run up in fuel prices, even in the face of falling US demand.

In this environment, we have emphasized the importance of a nimble forecast process to adjust to changes in external market conditions as they emerge. With year to date light vehicle sales averaging about 15 million units, including an floor estimate of around 14.7 million units for May, we think our recently announced full year forecast captures a reasonable range of possible outcomes for the remainder of the year. But of course, we’re going to continue to monitor those conditions closely.

George Pipas

Thank you Emily. So with a 14.4 million SAAR in the month of April following the first quarter’s 15.2 and something in the range of 14.7 light vehicle SAAR for May, it certainly looks like the comment that Jim made at the end of our first quarter call that the second quarter could even be more challenging than the first is something that has in fact happened. Now with comments about some comments on industry sales and also the Ford report, Jim, would you like to take the baton?

Jim Farley

The month was a watershed, May was a watershed month. We are as an industry catching up with the breathtaking choices that customers are now making. As Emily said, there are a lot of economic indicators that we’re all watching as an industry. But one broke out in May, and that’s fuel price.

To give you an idea of kind of the velocity acceleration shifts, the B and C segment, the C segment has now become clearly the core segment in the US industry with almost one out of four vehicles being sold as a C car.

In May, small and midsized cars represented 47% of the retail industry, almost 50%. In February, it was 34%. That 13% shift three months later represents 1.5 million vehicles, customers, shifting to BC and CD segments. That’s a breathtaking shift, worth probably six assembly plants for the industry and one that has had a breathtaking impact on Ford, one that we’ve been tracking and adjusting our business to for the last several months.

I would say the most dramatic shift in customer segmentation potentially in two or three decades. Importantly, we’re inclined to believe this shift is permanent at Ford. The only uncertainty is how far it will go from here. As Alan said, we’re busy trying to get our arms around this shift in dimension, the range of possible outcomes from our manufacturing and product offer.

Sales in May were consistent with the trends we saw, incredibly strong car month for Ford Division especially. Our retail car business was up 20%, total up 4% because of our declines in fleet. Focus was huge, similar I’m sure to a lot of the sales reports you’ll hear today, but for Ford, an incredibly important milestone.

Our retail Focus demand and sales were up 105% versus a year ago. And total up 53% to almost 33,000 Focus. And that is the only second time in the history of our company that Focus has eclipsed 30,000 units, the only other time was October following September 11, with zero percent financing.

Focus days supply is now at 20 for Ford. Our dealers are proving they can turn this inventory with the best in the industry, similar to Prius and other hybrids. Focus retail sales were 91% of the beginning inventory in dealership lots. We turned the inventory 91%.

And as we move to increase the Focus production in early April, we announced the new Focus would be 245,000 units, up 30% versus last year. Recently we told our employees at Wayne that we’re shooting for 280,000 units next year. We have a redesigned two door Focus coupe coming that has significant improvements. So obviously we’re planning for a lot more opportunity with Focus in the coming years.

But Focus wasn’t the only highlight for Ford, Fusion retail sales were up 30% versus a year ago. This is a very important development for us because Fusion, unlike Focus is not a brand new vehicle, newer, but not brand new. And for its sales to spike up 30% versus a year ago is very meaningful for Ford. We’re seeing demand for four cylinder Fusion and also up market series and even Mercury Sable and the Mercury Milan showed significant increases.

In fact, we had at 18,000 units our best Fusion record of any month, ever, many years after the launch. But thanks to Focus and Fusion, our crossovers, I’m really proud of our sales team and our dealers because we are now gaining market share in the growing CUV and passenger car market. So those segments are growing tremendously and our share within them are outpacing the growth of the segments.

Trucks and SUVs, obviously were much lower than a year ago. The shift away from these segments towards smaller and midsized cars really accelerated in May, consistent with what Alan and Mark and the whole team communicated on May 22. In May, crossover sales were lower than a year ago, but that’s kind of expected because we were really hitting our stride last year at this time. And we still had our fourth best sales month of crossovers ever.

We’re very excited about the coming month as George mentioned, we have some news later in the call for you on our tactical marketing, but we’re really excited about the MKS and the Flex launch. Yesterday I was in DC for our long drive for MKS, both Flex and MKS are brand new vehicles, adds to our fleet, give us real opportunity to grow, a lot of new customers for the brand.

We have thousands of orders for the MKS already and the reaction to Flex has been extremely positive and we also have improved power trains on Escape and Mariner which are kind of symbols for Ford Motor in the future, we continue to not invest in power trains, years to come, but now when customers appreciate more efficiency.

And that’s it George, I’ll pass it over to you.

George Pipas

I’m going to provide some additional color here in relationship to the housecleaning items that I hope will be helpful to you. As you know from the release, Ford Lincoln Mercury sales were down 16% for the month and as it turns out, both retail and fleet sales were down by the exact amount, 16%.

The retail sales decline as you might suspect from looking at those additional sales tables that I provided to you, the decline in retail was more than accounted for by lower SUV, traditional SUV and truck products.

As I said, fleet sales were down 16% and within that, daily rental was down 30%. Commercial and government was about equal to a year ago. Now on a year to date basis, just a quick summary, retail is down 11% and fleet is down 11%. And within the fleet decline, we have a 23% reduction in daily rental in the first five months of the year, that’s about 40,000 units, a reduction from a year ago.

And commercial and government are basically flat. Each of those channels are reporting flat sales from our fleet departments. I want to just cover inventory, give you the reading at the end of the month. Jim gave you a couple of particulars as it related to, one particular as it related to Focus with regard to its retail base supply at the end of the month.

But in total, Ford inventory stood at 560,000 vehicles at the end of May. That was 137,000 cars, 423,000 trucks and the total level of inventory, 560,000, compared with 554,000, so it was about equal to the year ago levels.

As I mentioned last month, truck inventories and specifically in the F series category were higher than a year ago at the end of April and that is the case, it’s also higher than the year ago this month. That action or that was actually part of our plan as we entered the sell down and we certainly are making adjustments as you know from the details or the guidelines that we provided on May 22 because when we started that plan in January, trucks represented 13% of retail sales and most recently they represent 9%.

So you’re sort of aware of the adjustments that we’re making in the third quarter as well as the second quarter. We will provide now a little more detail I think on the production levels. Really what I’m doing is confirming the levels that were provided to you on May 22.

And those are as follows. In the second quarter, our plan is to produce 690,000 vehicles. When we made that announcement, our previous forecast was 710,000, but you were updated on that number on May 22, so we’re at 690,000 and the split in the second quarter is 245,000 cars which is a 5% increase from a year ago and 445,000 trucks which is a 23% decline from a year ago.

Overall, the 690,000 is a 15% decline compared with second quarter of 07. Again, no new news, just confirming that number. Now for the third quarter, we provided a range of 510,000-540,000 and now I want to give you the specifics. We’re planning for 525,000 vehicles produced which happens to be spot in the middle of the range and that consists of 195,000 cars which is a 7% increase compared with a year ago and 330,000 trucks which is a 28% decline.

The truck number for both the second quarter and the third quarter includes crossovers. And I do not want to get too specific into the absolutes, but I do want to say, confirm really what was in the release that there’s a modest increase in crossover utility vehicles in both the second and the third quarter compared with a year ago.

So the declines are concentrated in trucks and SUVs. And now I want to just provide one more piece of information with regard to our full year plan. The fourth quarter guidance remains intact, that is detailed in the release. But I just wanted to indicate that when the year is said and done, our 2008 North American production will consist of about 57%, almost 60% car and CUV production.

And that would mean about 40% truck and SUV production. That’s a shift in just one year’s time of about 10% because last year cars and crossovers accounted for 48% of production in North America and SUVs, traditional SUVs and our truck products accounted for 52%. So that gives you an indication of the direction that we’re heading, not only in 08 but beyond.

Now, I would like to open it up to Q&A and if you would facilitate that for us we’d really appreciate it.

Question-and-Answer Session

Operator

(Operator instructions) Your first question comes from John Murphy – Merrill Lynch.

John Murphy - Merrill Lynch

For Jim, I was just wondering as you look at launching the Fiesta in conjunction with the Taurus Fusion and Focus and really just how you’re going to position that? Because in the 90’s Ford had a little bit of trouble with the Taurus Contour and Escort overlapping I was just wondering how you’re going to slide that in there and make sure you have enough differentiation in size there.

And then George also on the F series launch I was just wondering given all the troubles and the rising gas prices that we’re seeing right now in the industry what you think of the F series launch and if there may be any change of strategy there?

Jim Farley

John, your first question about Fiesta positioning, there’s no doubt that the B and C segment package definitions have kind of elevated or walked over time and we did make an announcement last Friday that in early 2010 we’d be selling and manufacturing here in the Americas the new Fiesta, including a new body style, a hatchback.

That’s a significant announcement for us and it does have an impact on our lineup. The good news is the company has a ton of experience in Europe on how to float into the lineup bigger packages as we improve the offer to the customer and we’re very confident that when you look at our current lineup and our new small car lineup, we have a really good idea how all these will fit from a package, power train, pricing standpoint.

There’s no doubt that the opportunity in the new small car market that’s emerging is a premium high image, motive, small car that feels like a class above, both in package and features. And that’s the truth in the Fiesta. If you see and spend time with the product, that’s what you’ll see and that’s how we’ll position it.

But we have quite a bit of operational work to do to lead up to that launch from our dealer’s trading practices to our own marketing. We have a lot of work to do to prepare for that important launch which is a real watershed.

Going to the new truck coming, all I’ll say is that the customers buying pickup trucks today are very different than the ones buying only 90 days ago. The ones that are buying pickup trucks now are ones that need it. They see the product as a tool.

They want to know about the capability and the fact that we’ve improved our product with fundamental engineering, access to the box, class leading capability in towing and payload, improvements in fuel economy, new technology. Across the board improvements in fundamental engineering will bode very well for the customers that we’re seeing shopping today everywhere from Texas throughout the country.

And we have done a lot of research with the truck as you can imagine because the importance of our launch and we’re very reassured that the core customer that’s leftover in the segment is very interested in our new truck.

Operator

Your next question comes from Chris Ceraso – Credit Suisse.

Chris Ceraso - Credit Suisse

You mentioned earlier in the call about 14.7, is that a light number or a total number?

George Pipas

That’s a light number.

Chris Ceraso - Credit Suisse

The performance of the Edge and MKX and the Escape and Mariner, you mentioned that it was a difficult comparison but it seems like the shift at the customer level was almost exclusively towards passenger car. Can you comment maybe on the demand and what you’re seeing in terms of customer traffic for crossovers right now?

Jim Farley

I would say right now the CUV market is actually the stable segment in the industry, the one in which there’s a lot of new entries from quite a few manufacturers, but it’s a very stable segment. A lot of customers continue to look at it. What’s really interesting is the dynamic segments seem to be the C segment especially.

That’s the segment where I think all the manufacturers are seeing, but for us the Focus has just taken off beyond our wildest dreams frankly. And it seems like that is the right solution when you look at the interior package, the fuel economy, the price, the insurance, the cost of ownership, the resale value.

When you look at all the fundamentals in the business, the C segment seems to be offering customers a more tempting solution than and therefore more customers are flowing into that segment and making different choices. And I think that’s fascinating. We think it’s fascinating because in the past the passenger car segment was really dominated by the CD segment, the midsized sedan.

And what we’re seeing now is the C segment is really taking on a whole new meaning in the US and really becoming the center point of the passenger car business which is different than where it’s been in the past with Fusion and Camry and Accord.

George Pipas

To your point, your observation is based on among other things, that as recently as the last full calendar year, crossovers had grown 17% to a category that was 2.8 million. And we’re not seeing the double digit increases in the crossover category. The category is still up but just by 2-3% I think, once May results are reported.

And in fact, in the last couple of months, we’ve seen the newer crossovers advance which obviously we’re very optimistic about the Flex, the power train improvements that are coming on board on the Escape and Mariner. Edge and MKX really did have a solid [inaudible] in this environment. But the segment is, has kind of plateaud, but fortunately at a very high level and we’re certainly going to be taking a look at that and monitoring it as we go forward.

Operator

Your next question comes from Brian Johnson – Lehman Brothers.

Brian Johnson - Lehman Brothers

Wonder Jim and George, based on this shift into C class, where you’re seeing. First of all, what was the starting point in terms of price, average transaction price between say a Corolla or a Honda and the Focus and then as the more affluent buyers come into this segment, what have you seen and where would you like that to go?

Jim Farley

It’s interesting, the transaction price is not as different as you would think between all the different brands in the C segment. Our transaction price obviously is significantly up with our new Focus year over year. And with the new Corolla and not so old Civic, the transaction prices are very robust in the mid teens.

What’s really fascinating to me is the spec or content choice that we’re seeing. We continue to see more higher turn rates for higher grades or series levels. We’re seeing an appetite for new technology like Sync, more than double what we expected. So it seems like as customers come down from other segments, whether it’s the full sized truck or a midsized sedan, they’re bringing with them their expectation on content.

And that’s an opportunity for us obviously from a transaction pricing, which is kind of offsetting. And also we’re seeing an escalation in used car values in that segment as well. So it’ll be interesting to see how that works its way into the pricing equation for those customers.

Brian Johnson - Lehman Brothers

And when you look at the migration analysis, which I’m assuming you’ve done on the former Explorer or F series owner when they come into the showroom, what did they used to wind up with and what are they winding up with now?

Jim Farley

Well of course it depends on the customer, very complicated question and I don’t want to overcomplicate the answer. What I would say is that we’re seeing a growing trend for people in the traditional SUV and pickup truck business to look at even C segment cars, but also midsized cars and CUVs. In fact, one of the most important inflows for us for Edge and Escape and I imagine for Flex will be our very large car park or UIO of traditional SUVs.

Those customers were coming back when the segment was much stronger two or three years ago and they’re looking at a better technical solution for those that are interested in gas mileage and whether you want a two row or a three row, that’s one of the biggest assets that Ford has right now as we expand our CUV lineup.

But we are seeing cross shopping that was hard to predict six months ago where you have some F series customers looking at compact cars. What’s interesting is what we’re not seeing is a big growth in the compact truck market.

Operator

Your next question comes from Patrick Nolan – Deutsche Bank.

Patrick Nolan – Deutsche Bank

George you said the full sized pickup market was about 9% of retail sales this month, do you have that for a year ago?

George Pipas

Well for all of last year, it ended up at 14% and it was 14% of retail sales in the previous year as well. So basically what’s happened is and as I said earlier, or maybe I didn’t say earlier but I will, it was as high as 13% in January and February, you see. So just in three months time, it went from 13% of the retail market, think about that, that’s like 12 million units in the retail market, down to 9%, a 4% swing in a 12 million annual pie. So you can see what we’re trying to get our arms around here.

Patrick Nolan – Deutsche Bank

On the F series launch, have you adjusted your expectations at all for the actual mix of what you’re going to sell based on the fact you said the people buying it now are the guys that actually need the trucks. So are you expecting less of the crew cab short box sales and how is that affecting you guys as you’re launching the platinum edition, what do you think about mix?

Jim Farley

We have seen our mix shift, they sell down and also we expect a shift and we have been planning for a shift. What we will just kind of 50,000 feet, Patrick, the key for us will be the XLT grade and super cab seems to be having a resurgence. Last year the cabs were really very popular and the super cabs sales turns were lower. We’re seeing a reverse of that this year.

We’re also seeing a lot more popularity for gas versus diesel because of the fuel separation. And thankfully we in the planning of this new launch, we have working with our dealers put a lot more focus on XLT versus [aleriad] or platinum. Now there’s always going to be higher end consumers and that’s why we offer platinum. But the emphasis for our launch will absolutely bet the XLT grade new F series.

Operator

Your next question comes from Chris Woodyard – USA Today.

Chris Woodyard – USA Today

One of your competitors is making much hay out of $2.99 fixed price gasoline. What do you think about that kind of promotion, something that might work for Ford?

Jim Farley

Ford has tried things like that in the past when fuel has escalated. Customers are really smart and what we’ve learned on the full sized truck and across the lineup is that they, how well an offer like that is executed, the complexity of it, and customers understand what the zero-sum game is on incentives. So for us, it doesn’t make sense for a lot of reasons.

Number one, we have a great car offer right now. And those are where customers are shifting already. Other competitors maybe they don’t have that option because their lineup is different than Ford’s. So for Ford and our lineup today, the second thing is that we tried that in the past and although it can generate traffic, customers especially on the pickup truck side, because of some of the negative equity, they really want trading money.

And so their choice between no trading money and a subsidized gas or trading money that can get a business user a new truck that’s going to be a more efficient working tool, they’re going to take the trading money because that’s more important for their business.

Chris Woodyard – USA Today

On F series, any chance that F series will get knocked off by Camry this year do you think?

Jim Farley

We’ll let the customers decide on that. I’m sure there’s a possibility with the segmentation shifts. Our focus is not to add up all those things but remember, I really can’t predict those kinds of things. That’s up to the customer.

Chris Woodyard – USA Today

And you mentioned that the smaller SUVs, we’re not seeing a lot of switching to that. Hybrid Escape I would think would be doing really well, are the hybrid Escape numbers out?

George Pipas

The hybrid Escape numbers are about equal to a year ago. And at this point, our hybrid volume is pretty much capped by the agreements that we negotiated several years ago with regard to how many hybrid modules we can build which is about 20,000 Escapes and about 4,000 Mariners.

When we get closer we’ll discuss the incremental hybrid volume that we hope to deliver with the new Fusion and Milan which goes into production in December. But for right now, 24,000 is about as much as we can sell and in many states, well in every state, they’re pretty hard to find.

Chris Woodyard – USA Today

And just a point of clarification and please don’t groan, when we’re talking about a C as in Charlie vehicle being the sweet spot for the industry, we’re talking about a Focus sized vehicle as opposed to a Fusion sized vehicle.

George Pipas

That’s right and I think Fusion in the vernacular is a CD car. I think you’re going to see in this month’s sales statistics, some indication of, earlier he referred to May as a watershed month and so I think you can, I’d keep my eyes out for just really simple kind of things that’ll give you an indication of where the consumer is moving in an accelerated rate.

Operator

Your next question comes from Sarah Webster – Detroit Free Press.

Sarah Webster – Detroit Free Press

You guys are launching a Flex today in Ontario and at the same time on this call you’re talking about how the crossover segment has plateaud and I think Jim used the word stable and it doesn’t seem like the great opportunity that it might have been when this vehicle was being planned and crossovers were looking like the wave of the future instead of C cars. I guess could you talk a little bit about what the opportunity is for Flex going forward?

Jim Farley

It’s very clear that in the CUV market, those with new products win. And the Flex is a totally new proposal. We are very confident in how the product is executing. We’ve gotten a very positive reaction from customers who see it as a new solution where there are seven seats, five inches more leg room than a full sized SUV in the second row.

20 mile per gallon fuel economy on highway, new technology and a great design and what we see in the CUV market because we were talking about segmentation trends, very consistent. But if you look within that, the new products are doing very, very well, the ones that are recently launched.

And we benefitted from that with Edge and MKX and the improvements on Edge and Mariner. So it’s really kind of who has the newest product.

Sarah Webster – Detroit Free Press

So are you seeing the overall CUV segment, are you expecting that to remain flat or to increase into the future?

George Pipas

I think that probably we can expect it to move with the overall industry Sarah. In other words, it’s getting so large that it’s going to start behaving like the overall industry. S o here we are in a period where we can sort of understand why things are stable because look at the overall industry, sales are down 8%, okay.

So a stable segment in an industry that’s down 8-9% on a year to date basis is a place to be, particularly one that’s so large. Going forward, as the economic environment improves, I would expect this segment to resume seeing some growth in absolute terms.

Sarah Webster – Detroit Free Press

Mercury and Lincoln cars didn’t seem to do quite as well as the Ford cars did and I wonder if we can deduce anything from that in terms of what customers are shopping for in terms of value in this environment.

George Pipas

I think it mostly has to do with Focus. When Focus is up more than 100%, 105% to be exact, there is not a, we don’t have a Focus in the Mercury or the Lincoln side of the showroom.

And when you look at the results, the Sable retail sales were up, the Milan was up, the MKZ was basically flat this month, the midsized Lincoln was basically flat this month in the environment that we’re confronting, so overall Lincoln and Mercury had a pretty good month considering, relative to the Ford division. But the big difference is the C car.

Operator

Your next question comes from Bill Koenig – Bloomberg News.

Bill Koenig – Bloomberg News

About the shift to smaller cars being permanent, F series got passed by at least four models in May. You know you don’t want to make too much about one month but just wondered what that kind of tells us as a reaffirmation of the changes you were talking about.

Jim Farley

I think it’s a watershed month as I said, it’s a sign of the times. We saw it ourselves at Ford and look at the Focus numbers versus F series retail. So it’s a significant development but it’s not surprising given the fuel price. You know we’ve never seen $4.20 a gallon gas. And that’s just a sign of the time and I think May has been a watershed month and we always said that the second quarter would be challenging. But within that, the segmentation shifts have been as George said, breathtaking.

Bill Koenig – Bloomberg News

So did Focus outsell F series on a retail basis?

George Pipas

At retail, so it’s a watershed month at Ford Motor Company too.

Bill Koenig – Bloomberg News

And you don’t break out specific retail?

George Pipas

I think you can trust me Bill.

Operator

Your next question comes from Jeff Bennett – Dow Jones.

Jeff Bennett – Dow Jones

Knowing that you are planning and marketing and don’t want demand to outstrip Focus, is there a push inside Ford now to look at taking that Focus and building it at another plant, bringing shifts over from your Wayne Truck Plant to build that, anything like that you’re kind of now looking at?

Jim Farley

A fair question, on May 22 when we kind of outlined our plan and how we’re executing and accelerating things, we kind of laid out a timeline to address all the segmentation and commodity price escalation and we’re going to stick to that.

Our plan is to communicate to you and all your colleagues sometime in July our more permanent plan. But obviously we’re really focused on Wayne right now and we told the employees as I said that we’re shooting for 280,000 next year and that’s a big number for us.

Jeff Bennett – Dow Jones

Rick Wagoner said today that basically the crew cab pickup trucks are really being hit hardest as those people that were buying them for personal use are getting out of them. Are you seeing that too, just across the board that really crew cabs are now kind of out as a consumer switch?

Jim Farley

Actually, I would say we have seen even within 30 days, the last 30 days a pretty dramatic shift toward super cab and regular cab, especially regular cab. I mean the segment is still very large and we have a diversity of customers with a diversity of amount of use.

We just got finished with a group of focus groups talking to customers to understand the behaviors to really call the segment. And it was really interesting what we saw. We have still a lot of recreational people who’s recreational identity if focused on hauling their toys. And maybe there are less of them, but they still want crew cabs.

The discretionary people who use a pickup truck for commuting and very light duty use and never use the bed and just it was a comfortable, big vehicle, those people are probably the ones that you’re seeing at the auction right now, those trucks. But we have seen a shift, but I wouldn’t characterize it as 4-door crew cab is suddenly an antisocial vehicle, that’s way too far.

George Pipas

I want to now interrupt the call for a couple of items, one of which is not so much news and that is that beginning next month, we will not be including Jaguar Land Rover in the Ford sales release, the Dearborn based Ford sales release. Certainly will be working with our colleagues at Jaguar and Land Rover to provide the data so that their sales can be consolidated with the rest of the industry and we’ll be striving for a smooth transition there.

The other item is one that pertains to as Jim said a tactical announcement. And Jim do you want to just mention our plans for the month of June that relate to an incentive offer?

Jim Farley

I just wanted to let everyone know because we were really here to talk about May but looking forward in June, obviously for our dealers and our customers, how we’re going to merchandise our way through the sell down, a really big opportunity for us and so we are announcing this afternoon and we wanted each of you to know this personally.

An employee pricing plan for our F series pickup trucks, and it’s a big deal for us. We’ve been the 31 years running as the leading vehicle in the segment and we want the sell down to go smoothly and we think this really is an important merchandising tool that customers can buy an F series for the same price that an employee at Ford Motor Company can. And it’s going to run from June 3 through June 30 of our 2008 F 150, 250s and 350s.

George Pipas

Okay, thank you Jim and Operator thank you for facilitating our call. We very much appreciate how this call progressed along quickly and look forward to talking to everybody in the days and weeks ahead. Thanks again.

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