Ford has posted a Q3 loss that is largely attributable to the sale of Kwik Fit, the fast fit chain disposed of earlier in the year. The results are otherwise favorable for a company which has endured the worst, but it needs to find an end to the inflated discount incentives in North America to really improve its outlook.
Ford, the world’s number two carmaker, posted a loss of $326 million for Q3 2002. This compares to the near $700 million loss the company made in the same period last year. This improvement is bolstered by the fact that majority of the loss was due to the sale of Kwik Fit, the fast fit chain Ford sold earlier this year.
CVC Capital Partners, a private equity firm, purchased Europe’s leading automotive repair chain in August for a cut-down price of GBP330 million. In 1999, Ford bought the chain, which has 2,500 outlets across Europe, for GBP1 billion, but new chief executive Bill Ford reversed his predecessor’s expansion strategy, making Kwik Fit surplus to requirements.
Ford has endured a torrid 12 months, in which it has faced quality-control concerns, a financial disaster during the Firestone rollover incidents, and massive cost cutting exercises. The company once poised to topple General Motors as the premier carmaker should now emerge from this period leaner, more efficient and ready to turn the tide.
Sales for the company during the quarter rose 9% to 1.66 million units, and its European operations are looking strong, with several models challenging for class-leadership. Furthermore, the Ford Focus is now the world’s best-selling passenger car. Provided Ford can increase its margins in its North American homeland, where discounts are currently above their natural levels, the outlook should improve.
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