The world's third-largest automaker announced a quarterly loss of $8.7 billion – a record – and unveiled plans for a revival.
The quarterly loss included $8 billion in pretax writedowns for plant closings. Ford has recorded six losing quarters during Mulally's 8-quarter stewardship of the company. The Detroit-based motor company reported a $750 net profit during last year's second quarter.
Mulally said Ford will convert three North American SUV factories to produce small cars. The motor company will also add fuel-efficient cars to the North American lineup, including six European small vehicles.
Mulally also announced that Ford will double its production of hybrid vehicles in 2009.
"We continue to take decisive action in response to the rapidly changing business environment," said Mulally in a statement, according to the Detroit Free Press. "Our European and South American operations are robust and profitable. We have momentum in Asia. And we are uniquely positioned to leverage our global assets and the global strength of the Ford brand to quickly bring more small, fuel-efficient vehicles to North America."
Ford surprised analysts by posting a $100 million first quarter profit, after having lost over $15 billion the previous two years. Recently, record gas prices have stalled the sales of its pick-up trucks and SUVs.
Sales of Ford's F-Series, for example, dropped 31 percent during the second quarter of 2008. Thus, Ford's new focus on small, fuel-efficient cars. Mulally, though, said he doesn't expect a U.S. economic turnaround until 2010.
"They believe this is a permanent shift in buyer sentiment that they have to adjust to no matter how hard it will be,'' Maryann Keller, an independent auto analyst, told Bloomberg News. "This is going to be expensive. The losses are going to be bigger during this transition.''