updated 1/8/2006 7:25:02 PM ET 2006-01-09T00:25:02

The shift by U.S. drivers away from highly profitable large sport utility vehicles will accelerate this year, forcing Detroit's carmakers to "change or die", the new head of Ford Motor's American business warned on Wednesday.

Mark Fields, president of Ford's Americas division since October, also confirmed that Ford was planning to re-enter the small car segment in the US for the first time since 1997, though he gave no indication of when.

The warning by Mr. Fields sets up Ford in stark opposition to rival General Motors. GM is betting on a revival of interest in its largest SUVs this year to help it recover from its worst financial crisis in more than a decade. It has dubbed 2006 the "year of the truck".

GM executives have predicted its relaunched SUVs will give it a higher share of a stable segment, on which it has relied for profits for five years. But Mr. Fields, speaking at the Los Angeles motor show, attacked this approach as "old thinking".

"Either the American automakers, including Ford, will begin to change, play far better offense and truly connect with customers," he said. "Or it will be the beginning of the end for some companies."

He admitted that Ford — along with U.S. rivals — had ignored the car sector for years because of the "addictive" profits to be made from SUVs and pick-up trucks.

But he said that was changing. The switch back to cars was underlined by the announcement of the addition of a night shift at its plant in Hermesillo, Mexico, to increase production of the Fusion saloon.

Shares of GM and Ford tumbled last year and both companies were downgraded to junk bond status as a combination of falling SUV sales, loss of market share to Japanese and Korean rivals and spiralling healthcare costs led to heavy losses and fears of bankruptcy.

Mr. Fields is drawing up a plan, dubbed "Way Forward", to slash costs at Ford, which will involve factory closures and job losses, though he gave no details.

But he pointed to a switch of product focus away from big offroaders towards more fuel-efficient car-based "crossovers", which have characteristics of both cars and SUVs, and on cars, to help it put the Ford brand back on track after years of falling market share.

On Wednesday the company said it had increased its car sales for the first time in six years in 2005, although overall sales fell 5 per cent thanks to a big fall in light trucks.

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.


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