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Ford Says Overseas Losses Will Triple in 2nd Quarter

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#1 ·
By BILL VLASIC
Published: June 28, 2012
NY Times

DEARBORN, Mich. — The Ford Motor Company’s chief financial officer said Thursday that the automaker’s international losses would triple in the second quarter, primarily because of much weaker European sales. The executive, Robert Shanks, also disclosed that Ford would consider closing an assembly plant in Europe should demand keep falling.

Ford lost $190 million in the first quarter in its international operations, with Europe accounting for nearly 80 percent of the total. Since then, the market has grown worse, and Ford losses are mounting.

“We lost $190 million in the first quarter, and it will be three times greater than that in the second quarter,” Mr. Shanks said in an interview on Thursday at Ford’s headquarters.

A loss on international operations of $500 million to $600 million in the quarter, which ends Saturday, will depress Ford’s overall earnings for the period. Previously, the company had forecast that international losses for the second quarter would be roughly the same as the first quarter.

“We have good results in North America and solid results at Ford Credit, but international losses will be triple,” he said. “The overall company profits will be substantially lower.”

Up until now, Ford has suffered less from the downward spiral in European vehicle sales than its Detroit rival, General Motors, which is planning to close at least one assembly plant on the Continent.

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#2 ·
since imho Fomoco is Very conservative with their Announcements nowadays
so
I taking this to mean that EuroLosses™ will be THRUtheROOF.

Saw some posts elsewhere about GMinEurope...
which imho is a very different situation...
I expect...
a good number of companies** across the Pond to crash-if-not-burn



** is a Country "too big to fail"???
 
#3 ·
Ford is very good at giving accurate financial details since Mulally took over. The one saving grace for Ford is that it isn't going after market-share by giving huge incentives in Europe. The results will be what they are, but other companies will be doing worse because they are mortgaging tomorrow to gain market-share today.

Consolidation of global platforms will help to stem the international losses by spreading development costs over wider areas. While pockets of losses will happen in this pathetic economic environment, the overall impact on the entire company will be mitigated by efficiency.
 
#4 ·
Ford positioning for long-term recovery in Europe - DetroitNews
July 6, 2012 at 8:17 am
Neil Winton

...Last month Ford shocked investors with a warning that profits would take a big hit because its international business was struggling. Investment banker Morgan Stanley reckoned that Ford Europe was the main culprit, estimating that its losses would more than double in 2012 to well over $1 billion.

"Ford's new guidance implies what we estimate to be at least a doubling of full year European pre-tax losses to over $1.1 billion. We now expect Ford Europe losses to exceed those of GM's Opel," Morgan Stanley said in a report.

"Ford knows it cannot let its European excess capacity fester — something has to be done," the report said.

Earlier this year Morgan Stanley predicted that Opel-Vauxhall losses might reach $1.5 billion in 2012.

Previously, Ford had said European losses would probably reach $500 million to $600 million as the crisis surrounding the European Union's currency, the euro, sapped consumer confidence and weakened the economy. This has undermined the new car market and forced the mass car manufacturers into a vicious cycle of incentives and price cutting to move the metal. Profit margins have been wiped out and losses have been mounting at Peugeot-Citroen and Renault of France, Fiat of Italy, and at the American transplants GM Europe and Ford Europe.

Germany's Volkswagen, Europe's top-selling vehicle maker, is believed to have retained its profitability in Europe, while its luxury subsidiary Audi continues to make big money in China and other emerging markets, along with its up-market compatriots BMW and Mercedes...
<eye candy break>
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..."Ford and GM at least have the consolation (unlike those in France) that the money they are losing in Europe is balanced by money made elsewhere. It must also be deeply mortifying for Ford and GM to be undermined by uncontrolled losses in Europe," (Professor Karel Williams of the Manchester Business School)

But for all the apparent woes at Ford Europe, experts like Ian Fletcher, analyst with IHS Automotive, feel it is on the right long-term track, and doesn't have much of an excess capacity problem.

"Things don't look great for Ford in terms of capacity utilization, but it is going through a transitional stage," said Fletcher.

Morgan Stanley had said Ford's factory capacity use stood at 63 percent in 2012, lower than all its competitors except Fiat at 57 percent and worse than GM's 66 percent.

Fletcher said Ford Europe is reorganizing its production. It will also benefit from some new models.

"Ford is in the process of raising its capacity utilization and putting similar sized vehicles in the same plants, and cutting down inefficient supply chains. All these new models (including the C-Max) will inject some new vigor into sales. Looking at the numbers, 2012 will be Ford's lowest ebb in the region with production likely around one million. But we expect to see this start growing next year toward 1.3 million by 2014," Fletcher said...

Temporary layoffs
Fletcher said Ford's increased production will be of higher profit-margin vehicles. He didn't think Ford would need to close plants, but might have to lay off workers temporarily.

Compared with GM Europe, which has announced probable plant closures, Ford was ahead of the game.

"GM has a lot of work to do, and it will take two or three years for it to pan out the way it wants to. GM is behind Ford, probably there's a couple of years difference between them at the moment. Ford is probably better organized, but both are bringing out interesting new models," Fletcher said...

...Professor Williams of Manchester University put it this way.

"Europeans have got themselves into an awful mess through a halfway house of integration. To make a go of it, the European car business needs a degree of solidarity, but there's no political agreement about what to do. This is a halfway house of a common currency without relevant banking and fiscal arrangements necessary to make it work. The car industry has an insoluble problem with the worst of all worlds," Williams said.

More... Yes, there's MORE
 
#6 ·
thought I'd add this...
Discount wars erupt across Europe as sales sag - Reuters/AutoNews
Opel, Fiat, Renault, Seat, Peugeot among mass-market brands squeezed

Jennifer Clark
Reuters -- July 20, 2012


MILAN -- Free road tax, cheap fuel, cash rebates and even a free car.

These are only some of the knock-down offers European automakers are offering in a brutal price war to try to lure the few consumers still buying cars in a deepening five-year sales slump.

"We're not selling a car at a discount. We're selling a discount with a car attached," said Claudio Stucchi, a sales consultant at Milan Honda dealer Mi Auto.

He is selling new CR-V SUVs for 22,900 euros ($28,000). That's 7,000 euros off the sticker price -- Honda's most aggressive offer ever in Italy.

Then there's the 20 percent discount on new parts, plus a free rubber ball thrown in for the kids of anyone who walks through the door for a test drive.

"If there's no discount, the cars don't move," the forlorn car dealer said, shaking his head with a wry smile.

The bargains underline the pressure in the mass market, where car makers are trapped between slow sales in a moribund economy and offering discounts that gnaw away at painfully small margins.

Ford's mounting losses
Ford has already warned investors it will lose about $570 million in Europe in the second quarter, compared to a first-quarter loss of $190 million.

Ford's western European sales slumped 10 percent in the first half of 2012 as it opted not to match heavy discounting by rivals. But the sales decline hit 16.1 percent in June, year-on-year, in Ford's traditional 19 western European markets.

Peugeot last week said it would close a factory and cut 8,000 jobs to stop cash burn.

GM's European arm Opel, meanwhile, is overhauling management to speed its restructuring and cut losses of $3.5 billion over the past three years.

Peugeot and Opel are the biggest discounters in Germany, France and Britain, according to a Barclays report that downgraded the European auto industry on July 13, showing the direct and deadly correlation between discounting and losses.

In Britain, Peugeot offers three years' free insurance, tax, servicing, roadside assistance and warranty for anybody buying a new car.

'Bloodbath'
In France...

Read more: http://www.autonews.com/article/20120720/COPY01/307209983#ixzz21VRLtNRT
 
#8 ·
I think the story is a bit more alarmist than actual reality, Ford in fact seems to be dealing with their European excess production capacity better than most any other manufacturer. As suggested by Ausrutherford above Ka will indeed be moving back to a Ford facility for the upcoming, next generation model and, perhaps more importantly, will be moving back to a more innovative design as well. The current Ka is arguably a bit of a snoozer compared to the spunkier and funkier model it replaced and the very promising Start concept should mean drastically increased sales for the little Ford.

Look for the new Ford EcoSport to eventually make an appearance in Europe as well supplementing the new Ford B-Max as a replacement for the recently defunct European Fusion mpv. Such an eventuality may not guarantee European production for that model, but I certainly wouldn't bet against it. I would also look for an uptick in sales of the Ford Mondeo (Fusion) as the new model hits the market. Ultimately, I would look for one assembly facility to potentially close barring a significant short term recovery, but one facility is nothing compared to the scenario the article hints at.
 
#9 ·
^ I dunno, Syr (btw Welcome!!!)
kinda think the Euro-situation could wreck the world almost as much as an Extinction-Asteroid

otoh, it's a GREAT time if you have clinical paranoia!

Ford reports 58% drop in Q2 earnings - DetroitNews
July 25, 2012
By Karl Henkel


Ford Motor Co. on Wednesday upped its European loss projections, nearly doubling previously expected losses to $1 billion for 2012 amid continued concerns about the region's sovereign debt crisis and high unemployment, which have dealt a blow to consumer confidence and automobile sales...

..Investor speculation regarding Europe had taken a toll on Ford's stock price, which this week reached a 52-week low of $8.95 per share. It closed Tuesday at $9.06. The stock was up 1.8 percent in early trading, but dipped below $9 a share after the opening bell...

From The Detroit News: http://www.detroitnews.com/article/20120725/AUTO0102/207250361#ixzz21fOf2qzM
 
#10 ·
^ I dunno, Syr (btw Welcome!!!)
kinda think the Euro-situation could wreck the world almost as much as an Extinction-Asteroid

otoh, it's a GREAT time if you have clinical paranoia!
It could indeed get very interesting before it gets better. That said, given what I've seen, I suspect that Ford is waiting for the herd to get thinned out in Europe, and positioning themselves to take advantage of the same when and if that occurs.

And thanks for the welcome 2b2. :)
 
#11 ·
It could indeed get very interesting before it gets better. That said, given what I've seen, I suspect that Ford is waiting for the herd to get thinned out in Europe, and positioning themselves to take advantage of the same when and if that occurs.

And thanks for the welcome 2b2. :)
There is a lot of new products right around the corner.
 
#14 ·
There is a lot of new products right around the corner.
Exactly, Ford Motor including European operations isn't at all acting like a company getting ready to sell produce fewer total units in Europe (or anywhere) long term. In fact they are acting like the expect the opposite IMO. I'm honestly wondering if they expect Opel to go the way of the Dodo before it's all said and done.

really?
I only know of 2* intros in 2013: one Ford, one Lincoln.
PM me?

I'm not counting the Mondeo since the Fusion's this year
I'm betting he is counting the Mondeo, since the actual launch of that car should make a pretty significant difference in that market. Also, you do have new Fiesta and Ka models right around the corner, with the latter returning to an 'all Ford' status, and EcoSport should be coming soon as well. On top of that you have S-Max and Galaxy replacements coming in the near future as well, throw in the impending arrival of Mustang in a couple of years and you've got a lot of new sheet-metal coming to Europe pretty quickly.

Opting to not rely on heavy discounting may be a key factor in justifying their need to close a plant.
Very possibly, and it is also worth mentioning that Ford has a lot of facilities that are starting to get a bit gray around the temples in Europe. As the plants themselves are replaced and or updated the possibility that they could lose one to simple technological advancement is very real.
 
#15 ·
Ford warns of deep Europe cuts - News.com.Au
Mira Oberman, AAP
July 26, 2012


FORD Motor Company has warned of major cuts to its European operations as heavy losses there cut into the second largest US carmaker's profits.

Chief executive Alan Mulally said Europe's troubles run deeper than the current economic crisis and cautioned that all carmakers must address the region's serious problems with overcapacity.

"This is a structural issue, not a cyclical issue. It's not going to come back fast and we're not going to be saved by volume," Mulally said in a conference call discussing Ford's second quarter results on Wednesday...

...Ford's second quarter profit fell by more than half to $US1.0 billion ($A980 million) following a $US404 million loss in Europe.

It forecast that the troubled European unit will post a loss of $US1 billion this year, dragging total profits significantly below the $US20.2 billion Ford posted in 2011.

Mulally declined to provide any details or hints as to where the European cuts will strike or how many plants and jobs could be affected.

However, he cautioned that Ford will "continue to match our production to the real demand, which means we're bringing the production down".

By referring repeatedly to the restructuring in North America - where Ford's workforce was slashed in half from 2005 to 2009 - Mulally and chief financial officer Bob Shanks implied the European cuts will be significant.

"We're clearly looking at the situation in Europe with a great sense of urgency," Shanks said.

"When you look at any significant restructuring that you have to do in the automotive business ... you're going to have to hit all the parts of the business to get it right and get a firmer foundation for profitable growth in the years ahead. And that's what we're going to have to do in Europe."...


Read more: http://www.news.com.au/business/bre...ts/story-e6frfkur-1226435284943#ixzz21xKq5FoR
 
#17 ·
^ ok TY


&
as someone said elsewhere about expecting nameplates to start disappearing from Europe...

Uncertain UK future for Honda Accord - Autocar.co.UK
Falling sales and a weak D-sector could prompt Honda to leave the next Accord off the UK sales list

Mark Tisshaw
23 July 2012

Like other cars competing in the cut-throat mainstream D-sector, Accord sales have been hit as drivers are forced by CO2-based taxation to downsize into Golf-class cars.

The rising popularity of compact SUVs is also undermining the European D-sector. UK sales of the Accord have slipped from about 10,000 per year to about 2500.

Importing the Accord from Japan also seriously depresses the car’s profitability because of the strength of the yen against sterling.

Currently, 93 per cent of Honda’s UK sales are of cars made in Britain, resulting in the Accord becoming a niche model alongside the CR-Z and Insight hybrids.

- - - - - - - - - - - - - - - - - -

afaik the euroAccord is/was the equivalent of the NA Acura TL
& a competitor of the delayed Mondeo...
...hmm
 
#19 ·
...That will not include established automakers though...
I dunno, ausrutherford ... my paranoia is going full force & I'm seeing "portents", like:

High-ranking designer leaves GM suddenly - FreePress
July 28, 2012
by Mark Phelan


One of General Motors' highest-ranking designers, Dave Lyon, left the company unexpectedly Thursday, just days before he was scheduled to take over design for GM's European Opel/Vauxhall units...

...He was expected to take over GM's German design studio on Wednesday. GM promoted him from boss of North American interior design and brand champion for Buick and GMC to vice president of design for GM Europe on June 18.

- - - - - - - - - - - -

goodbye Vauxhall if not Opel too?


edit: another...


- - - - - - - - - - - -

GM global marketing boss Ewanick leaves company, source says - Automotive News
July 29, 2012
by Mike Colias


General Motors' global marketing chief Joel Ewanick has left the company, a source familiar with the situation said.

GM is expected to announce Ewanick's departure later today, the source said...
 
#20 ·
I dunno, ausrutherford ... my paranoia is going full force & I'm seeing "portents", like:

High-ranking designer leaves GM suddenly - FreePress
July 28, 2012
by Mark Phelan


One of General Motors' highest-ranking designers, Dave Lyon, left the company unexpectedly Thursday, just days before he was scheduled to take over design for GM's European Opel/Vauxhall units...

...He was expected to take over GM's German design studio on Wednesday. GM promoted him from boss of North American interior design and brand champion for Buick and GMC to vice president of design for GM Europe on June 18.

- - - - - - - - - - - -

goodbye Vauxhall if not Opel too?


edit: another...


- - - - - - - - - - - -

GM global marketing boss Ewanick leaves company, source says - Automotive News
July 29, 2012
by Mike Colias


General Motors' global marketing chief Joel Ewanick has left the company, a source familiar with the situation said.

GM is expected to announce Ewanick's departure later today, the source said...

Established will probably grow because they need higher end models to make more profit.

Thats why the VW CC exists. The Passat couldn't get the higher prices, so VW did the CC. Thats also why they are currently working on the SC, which will be a 4 door coupe of the Golf platform.
 
#21 ·
Established will probably grow because they need higher end models to make more profit.

Thats why the VW CC exists. The Passat couldn't get the higher prices, so VW did the CC. Thats also why they are currently working on the SC, which will be a 4 door coupe of the Golf platform.
that^ would be very interesting to apply to Ford



like
could the CD4+3 ""Taurus"" actually be-or-include a (even) high(er)-end car?
 
#22 ·
that^ would be very interesting to apply to Ford



like
could the CD4+3 ""Taurus"" actually be-or-include a (even) high(er)-end car?
The point is not to go bigger, but us the same size car and make it premium with special styling. 4 door coupes of the Focus and Mondeo platforms would be a good step.
 
#23 ·
The point is not to go bigger, but us the same size car and make it premium with special styling. 4 door coupes of the Focus and Mondeo platforms would be a good step.
yeahBut
the CD4+3 is on my mind AND the Taurus would have be re-worked for the platform change AND wondering if something could be developed that *might* sell in Europe (yeah unlikely)
+
since CD4 is kinda 'booked' for the near future: Fusion just starting & Mondeo delayed
actually/imho
a Focus/C-Max/G.C-M highend car would be even better for economizing Yurps
+altho
for the US, ^that sounds like my 2-sized MKE ... which all I heard is silence
 
#26 ·
via my friend Alex on facebook

Ford relies on its N. America playbook for Europe - Automotive News Europe
Bradford Wernle
July 30, 2012 06:01 CET


...Ford CFO Bob Shanks described the situation in Europe as "very, very serious," and said it could remain challenging for some time. Ford is reviewing "all areas of our business to address the near-term challenges," he said.

Ford recognizes that it has excess assembly capacity in Europe. One solution would be to close a factory, something Ford did in the United States and Canada. Ford hasn't closed a European plant since 2002.

"Ford management appears to be losing patience with Europe," Morgan Stanley analyst Adam Jonas wrote in a research note issued before the second-quarter results were released. "And they should. After all, it's on track to lose more money than GM this quarter. Unfortunately, capacity exit in Europe requires years to execute."

Shanks declined to say what long-term steps the company might take to address the capacity issue. But it has taken short-term actions such as shortening workdays, reducing line speeds and laying off temporary workers. Ford expects to cut production by 31,000 units in Europe in the third quarter from year-earlier levels. In contrast, it says it will boost North American output by 34,000 units. And with capacity it has added in China and Thailand, it plans to boost production in the Asia Pacific Africa region by 65,000...


plenty More...
 
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