Ford Motor's redesigned F-150 pick-up is boosting the company's finances. Ford hopes to prolong this trend by trimming around $US1,000 from each model's production cost by the end of 2004. As long as the F-150 remains Ford's best selling vehicle, the company can be confident of the boost it will provide to the $7 billion profitability target.

Ford Motor has announced that it will cut around $1,000 per vehicle from the cost of manufacturing its new flagship F-150 truck by the end of 2004. The company states that rather than cutting content within the vehicle, it will reduce variable costs in the production process to achieve this target.

The F-150 truck is Ford's best selling vehicle in the US, expected to sell in the region of 550,000 vehicles and is widely seen as the key model to return Ford to a healthy level of profitability by 2005, after several years of poor financial performance.

However, several barriers may prevent it from reaching its estimated sales figure. The US market has not performed well in recent years, and manufacturers have needed to offer significant incentives to keep sales at their current level of approximately 15 million vehicles.

If the market remains depressed, it is unlikely that Ford will reach its target without the use of incentives. However, incentives are a further drain on the vehicle's profitability, further hampering Ford's ability to hit its target of $7 billion profitability for the group as a whole by 2005.

However, Ford has indicated that its recent use of high incentives such as $1,000 rebate and 0% financing has only been for the original customer loyalty programmes, and that these deals would not be escalated further.

Additionally, the number of vehicles ordered with non-standard extras has also surpassed Ford's expectations, which will be a further boost to profitability. Whatever the state of the market, Ford probably has a right to be confident about the F-150 as it's not only Ford's best seller, it is also the US market's best seller as well.

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