The impact of low gas prices on vehicle output is hitting the Ford Motor Co. assembly plant in Wayne, Mich., with the auto maker reportedly set to eliminate one shift of production of Focus compact cars and C-Max hybrid vehicles at the plant in June.FRANCOIS LENOIR/Reuters
The fallout from plunging oil prices is hitting home in two areas of North America that normally diverge when it comes to the impact of energy.
In Alberta, where the economy depends on oil, new vehicle sales fell sharply in March. In Michigan, where falling oil – and gasoline – prices are usually celebrated, another casualty of the oil shock has emerged: about 700 workers will lose their jobs at a Ford Motor Co. plant amid slumping sales of smaller cars.
Car sales slid 7.5 per cent in Alberta last month and 8.4 per cent in Saskatchewan, as the effect of the oil-price slide and energy companies' capital spending cuts, layoffs and other belt tightening took hold.
Auto makers report sales figures to DesRosiers Automotive Consultants Inc., which releases province-wide figures once a month.
Many auto makers refused to release their specific provincial sales numbers to The Globe and Mail, but some that did noted their own figures matched the overall data supplied to DesRosiers for Alberta, but differed from the consulting firm's Saskatchewan numbers.
BMW Canada Inc. said Alberta sales fell 21 per cent, while deliveries rose 8 per cent in Saskatchewan. Mercedes-Benz Canada Inc. said Alberta sales fell in the first three months of the year while posting strong increases in the next-door province.
Ford Motor Co. of Canada Ltd. and Toyota Canada Inc. said sales fell by double digits in both provinces last month. Toyota said sales rose in both provinces in the first three months of the year, while Ford said its deliveries fell.
The impact of low gas prices on vehicle output is hitting the Ford Motor Co. assembly plant in Wayne, Mich. Detroit newspapers and wire services reported Thursday that the auto maker will eliminate one shift of production of Focus compact cars and C-Max hybrid vehicles at the plant in June.
With gas selling for an average of $2.52 (U.S.) a gallon, Focus sales slid 15 per cent last month in the U.S. market, although they rose 2 per cent in the first three months of the year. C-Max sales slumped 23 per cent in both March and the first three months of 2015.
It's an unusual twist: For decades, the plant cranked out Ford's profit-spinning and gas-guzzling Lincoln Navigator and Ford Expedition sport utility vehicles – so many during the heyday of the SUV in the 1990s and early 2000s that it was believed to be the single most profitable assembly plant in the world.
But in 2008, when gas prices topped $4 a gallon and SUV sales hit a wall, Ford announced a $500-million investment to switch to small vehicles.
The plant has been working on three shifts, but will drop to two in June.
The effect of gas prices on the market is also evident in Canadian sales.
DesRosiers data showed that pickup truck sales surged 9 per cent in the first three months of the year across Canada.
Sales of compact cars fell 6 per cent during the period, while subcompact sales dropped 5 per cent.
"The more 'gas intensive' luxury and pickup markets are performing strongly," DesRosiers said in a note to clients.