Speaking to just-auto at the Geneva Motor Show, Ford Europe boss Stephen Odell said that Ford’s planned return to profitability in Europe by 2015 has been underpinned by the company’s global structure and that losses in the region would have been unsustainable without that.
Ford’s strategy for turnaround in Europe is based on cost and capacity cuts as well as a new product offensive that draws on global product development activity within Ford. Odell said that without that Ford global platform, Ford’s losses in Europe would not have been sustainable.
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“Because we are part of Ford global, we have been able to use the overall cycle plan and the menu of products and piggy-back on other things to have an accelerated product cadence. To have 25 vehicles that are all-new or substantial freshenings in five years is a real accelerant for us.
“You can’t do that if you are burning through cash and losing money.
“Because of the new products we have been able to take inventory down and change our channel mix. We have got dealers asking us for product rather than us saying ‘would you like some?’ It’s a different conversation. Our retail share across Europe went up 1% last year.”
He also highlights actions taken by Ford on cost and capacity in Europe. “We have taken some some tough decisions on cost, such as closing Genk, Southampton and Dagenham (stamping and tooling)”.
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By GlobalDataBy the end of this year when Genk closes, Odell says Ford will have reduced capacity in Europe by 18% (equating to the removal of 350,000 units of installed assembly capacity capability).
Odell also believes that the worst is over for the European car market and he is cautiously optimistic about prospects for this year.
“At the middle of last year the market was at its lowest ebb, the West European car market at its lowest level since 1995,” he points out. “Europe’s market was running at around 13.7m units [on Ford’s territorial definition]. “
However, he says there were signals at the back end of the year that things were starting to improve, albeit modestly.
“January’s industry came in at about 14m and February looks like it was at about 14.5m. We’re not celebrating but it’s a modest recovery.”
The UK registration plate change (year identifier) in March will distort that month’s European figures, Odell says.
“We’ll have a better idea of how the market is looking in April and May. Our industry forecast for this year is for an industry sales range between 13.5m and 14.5m, so maybe we’re in the middle of that or slightly to the positive side of the middle.”
A market of 14.5m would be 5-6% up on the previous year and 14m would be around 2% up.
“Yes, of course we’re still in a difficult market, but we’re in a market that is starting to recover,” he insists.
However, Odell maintains that long-term prospects in Europe are for sales under previous peaks following Europe’s unprecedented economic crisis that began in late 2008.
“Even if you go out five years you can see the industry possibly getting past 16m units, but pre-recession it was running at 18.5m,” he says.
See also: GERMANY: New reality for Europe means past market level ‘no longer feasible’ – Ford
GENEVA: Ford notes ‘downward pressures’ for Russia on Ukraine crisis
