Ford Motor Co. (F), the second-largest U.S. carmaker, said it can’t predict when profitability in Europe will improve as the sovereign-debt crisis in the region discourages consumers from making large purchases.
Europe’s auto industry is “clearly” having a difficult time, Stephen Odell, head of Ford’s operations in the region, said in a Bloomberg Television interview in Berlin. The U.S. manufacturer is sticking to a forecast for the western European car market to shrink by as much as 3.3 percent to 14.8 million vehicles, he said.
“I would encourage politicians to positively resolve the sovereign-debt issue quickly because that is causing concern,” said Odell, 56, who has led Ford of Europe since last year. “People are deferring their purchases, and that plays on everybody’s margins.”
An index of executive and consumer sentiment in the 17 nations that use the euro dropped this month to the lowest since May 2010, according to European Commission figures released yesterday. Ford’s deliveries in its 19 main European markets fell 4 percent in the seven months through July and its share of sales in the region declined by 0.3 percentage points.
Pretax profit at the company’s European operations tumbled 45 percent in the second quarter to $176 million, even as revenue jumped 20 percent to $9 billion. The maker of the Focus, Mondeo and Fiesta models is the fifth-ranked automaker in Germany by sales, with its 7.5 percent of the market less than half of the 20.8 accounted for by European industry leader Volkswagen AG, according to J.D. Power and Associates.
Margins vs Share
Ford aims to improve margins in Europe and won’t seek market share at the expense of profitability, Chief Financial Officer Lewis Booth said in January.
“Our plan across the globe is to profitably grow the business for all, for customers, dealers, shareholders and employees, and we do anticipate margins to improve,” Odell said today.
Odell was in Berlin to introduce the EVOS prototype car, which boasts cloud-computing Internet technology to give drivers access to data such as traffic reports, weather conditions and work schedules. Features from the EVOS may enter Ford’s production models in four to six months, Odell said.
“As the market recovers, and in due course it will, albeit slowly, we keep products coming out,” Odell said. After the global recession, “one of the reasons why Ford recovered relatively quickly around the world is, they kept investment going even in the tough times.”
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