Ford: Europe strategy OK
Detroit MI-08.14.2010 :-Ford is convinced it is following the right strategy in Europe, its second-largest region, even though its sales and market share are declining. In July, Ford's sales declined 22% in its 19 major European markets as industry sales dropped 16%.
In July, Ford's sales declined 22% in its 19 major European markets as industry sales dropped 16%.
Sales of the Ford Fiesta subcompact car fell 28% to 28,600 even though Ford said the Fiesta remained the second-best-selling car in Europe.
Industry sales have been declining in Europe for several months as government incentive programs designed to spur sales have expired, and the economic growth of several European countries has slowed.
That has led Ford's competitors to lure buyers with incentives.
Ford has largely avoided that temptation, but in July, the company's market share slid to 8.3%, down 0.7% from the same month last year.
"We've decided to reduce our participation and not follow the trend," said Rolent de Waard, Ford of Europe's vice president of sales. "We believe it is the right strategy because we have had a very strong profit development at the expense of some share."
During the first half of the year, Ford earned a pretax profit of $429 million, or about $957 million more than the first half of 2009.
Ford's profit increased to $322 million in the second quarter compared with a profit of $57 million a year ago.
For the remainder of the year, de Waard said he expects industry sales in Europe will likely stay stuck at a seasonally adjusted annualized rate of 14.3 million, down from 16 million during the first three months of the year.
Ford plans to build 365,000 cars and trucks during the third quarter, down 20,000 from last year.
De Waard said Ford is introducing four models in the next six months that could help Ford slow its market-share losses.
Ford is introducing a redesigned Mondeo sedan, and C-Max and Grand C-Max wagons later this year and a Focus compact car in 2011.
"I think the new Mondeo will benefit us because that segment, relative to the industry, has strengthened," he said.
Ford's commitment to keeping its incentives down has its limits.
"We intend to be competitive ... we have ambitious (plans) from a volume perspective," de Waard said. "But we believe that with the encouraging profit numbers that we have evidence of that this is the right strategy and we will stick to that."