Ford CEO Says He’s Concerned About Effect of Weakening Yen
“The most important thing that most countries around the world believe in is letting the markets determine the currency,” Mulally said today from Bangkok in reference to the Japanese currency, during an interview on Bloomberg Television’s “First Up with Susan Li.” “That’s just so important to all of us in the international trading system.”
The yen has fallen about 15 percent against the dollar since mid-November when Prime Minister Shinzo Abe, then running for office, began a campaign to talk down the value of Japan’s currency to revive the nation’s export-led economy. That has bolstered shares of Toyota Motor Corp. (7203), Nissan Motor (7201) Co. and Honda Motor Co.
The yen’s slide increases profit for Japanese automakers when they sell vehicles outside their home market, helping them to cut prices, boost advertising and improve products. The American Automotive Policy Council, backed by Ford, General Motors Co. and Chrysler Group LLC, estimates that the currency advantage equates to about $5,700 per vehicle.
In Europe, the company is scaling back production to meet “real demand” amid economic contraction in the region, Mulally said. Ford forecast in January that it will lose about $2 billion in Europe this year, up from $1.75 billion in 2011 and its previous estimate of about $1.5 billion.
Ford is cutting jobs in Europe and adding plants in Asia to curb losses in both regions while relying on earnings in North America. The company earned a record $8.34 pretax profit and 10.4 percent operating margin in its North American operations last year on strong sales of its F-Series pickups.
Calling China a “tremendous market,” Mulally said Ford is among the fastest-growing brands in that nation, where it’s focused on producing and selling its family of brands. Ford is listening to consumers to modify the Lincoln models it will introduce next year in China, the world’s largest auto market, he said.
“We really used the consumer feedback in our design process,” Mulally said. “We’re going to continue to incorporate the consumer’s input into the vehicle.”
Asia will probably generate about 40 percent of Ford’s sales by the end of the decade, with the Americas and Europe accounting for the rest, he told reporters.
Ford’s wholesale deliveries in China surged 46 percent to 105,209 through the first two months of this year, according to the Dearborn, Michigan-based company’s website. The China Association of Automobile Manufacturers forecasts total vehicle sales this year will surpass 20 million units for the first time, driven by urbanization and rising incomes.
Mulally said he was “really disappointed” after an advertising agency in India drew up mock ads for the Ford Figo, including one that depicted former Italian Prime Minister Silvio Berlusconi with three women who were tied up. Still, the CEO said the incident is unlikely to affect Ford sales in the country because the company didn’t use or approve the ads.
“This was done by our advertising agency in India for a completely separate advertising competition that they were having,” he said. “We are going to review all our processes and make sure that this absolutely does not happen again because this is not consistent at all with our Ford values.”
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