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Crossovers fuel Ford's May sales

From detnews| May 31,2007

Helped by strong demand for its new crossovers, Ford Motor Co. expects a rise in May retail sales -- its first increase in vehicle sales for individual customers in seven months.

Sales of Ford's new Edge and Lincoln MKX are climbing to fresh highs, while the redesigned Mercury Mariner and Ford Escape are posting double-digit gains this month, said George Pipas, Ford's manager for sales analysis.

"We're on pace to post a retail sales increase this month versus last May," he told The Detroit News.

Ford may not see an overall sales increase, though, because it is reducing low-margin sales to rental car companies and other fleet customers.

Automakers will report May sales on Friday.

In the first four months of the year, U.S. vehicle sales fell 7.8 percent, a steeper drop than most auto executives and forecasters had expected.

"Gross domestic product is slowing, the housing market is weakening. On top of that, you've got a gas price runup. This is weighing on consumers," Pipas said.

The decline also reflects an effort by all of Detroit's automakers to scale back their fleet business and focus on the more lucrative retail business.

Automotive research firm J.D. Power and Associates said retail sales -- sales to dealers for individual customers -- appear to have edged higher in May from year-earlier levels.

"On the retail side, we're seeing a little bit of an increase, less than half a percent," said Jeff Schuster, executive director of global forecasting at J.D. Power. "On the total market, we're expecting a pullback compared with last May."

The annualized selling rate in May 2006 was a relatively weak 16 million units.

So far this year, sales of small cars and crossovers -- car-based sport utility vehicles -- are rising against the trend.

Crossover sales are up 14 percent, and Ford's crossover sales have grown at double that pace, Pipas said.

With the rollout of the new Mariner and Escape, he estimated that Ford's crossover sales had surged about 70 percent in May.

Cars and crossovers account for about half of Ford's sales, up from 30 percent in 2004.

The Dearborn automaker said demand for pickups remains weak, reflecting softness in the housing industry. Compared with rivals, "we're a little bit more reliant on the construction business" because 40 percent of Ford's F-Series are Super Duty versions popular with builders, Pipas said.

He said Ford would report a drop in May sales of F-Series trucks "but much less than what it has been in the first four months of the year."

F-Series sales through April were down 14 percent, while Ford's overall U.S. sales declined 13 percent.

Ford, General Motors Corp. and Chrysler all have cut fleet sales by double digits this year.

Asian automakers, including Toyota Motor Corp., are increasing sales to fleets, "but nobody is taking up the slack fully," Pipas said.

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