Image: 2005 Ford Mustang
Carlos Osorio  /  AP
Ford will increase production of the Mustang to more than 192,000 units this year, a 70 percent increase from 2004.
updated 3/17/2005 6:13:40 PM ET 2005-03-17T23:13:40

Ford Motor Co. said Thursday demand for its hot-selling Mustang has prompted the automaker to increase production of the car to its highest level in a decade, but it won't improve Ford's overall production schedule through mid-2005.

Ford, the nation's No. 2 automaker, already announced it will build fewer vehicles in North America in the first and second quarters of this year versus 2004 because sluggish business has contributed to inflated inventories. Those production schedules factored in the higher Mustang numbers.

Ford's U.S. sales for the first two months of 2005 were down 3.7 percent from a year ago, according to research firm Autodata Corp.

But a bright spot has been the Mustang, whose latest version — mixing retro-styling with modern features — went on sale last fall. A base model sells for about $20,000.

Mustang sales last month were up 32 percent over February 2004 after a 12.5 percent year-over-year rise in January. Ford said it will increase production of the Mustang to more than 192,000 units this year, a 70 percent increase from 2004.

Ford hopes to sell 170,000 to 175,000 Mustangs in the United States and Canada this year, up from roughly 130,000 in 2004. The difference between the planned production figure and estimated sales is the lag time in getting the final cars built in late December from the factories to dealer showrooms.

Ford spokesman Dave Reuter said an important factor in current Mustang sales is that, unlike the past couple of years, the 2005 Mustang carries no consumer incentives _ something highly unusual for many domestic models.

In a research report Wednesday, Merrill Lynch analyst John Casesa said a few other all-new Ford vehicles — the Ford Five-Hundred and Mercury Montego sedans and the Ford Freestyle crossover vehicle — "should give Ford some breathing room as it continues to overhaul its portfolio."

Even as General Motors Corp., the world's largest automaker, said Wednesday it was slashing its first-quarter and full-year earnings forecast because of poor North American business and intense pricing competition, Ford reaffirmed its outlook.

Ford's first-quarter earnings guidance, announced in January, is expected to be in the range of 25 cents to 35 cents a share, excluding special items. For the full year, the company continues to expect earnings in the range of $1.75 to $1.95 a share.

In his report, Casesa said Ford's reaffirmation likely was an attempt to "ease investor concern that some of the troubles at GM could spill over to Ford."

"We believe the problems at GM are really GM-specific, and while declining market share is affecting Ford too, the company has a stronger portfolio of products and more benign legacy issues," Casesa said.

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