Is Ford on the Verge of Fixing Its Troubles in Europe?

The made-in-India EcoSport SUV is one of several new Fords coming to Europe. Photo credit: Ford Motor Co.

Is Ford  (NYSE: F  ) getting closer to making a profit in Europe?

Like most automakers doing business in recession-ravaged Europe, Ford has posted big losses in the region recently. Ford Europe lost a whopping $1.75 billion last year, and back in January the automaker warned that it could lose even more this year -- $2 billion.

But things have improved more quickly than anticipated, and Ford now says that it will lose less in 2013 than it did in 2012. Still, a profit seems a long way off -- or is it? In this video, Fool contributor John Rosevear looks at the state of Ford's turnaround effort in Europe, and explains why a top Ford executive recently said that profits in Europe are now "within reach".

Why it's time to say goodbye to "Made in China"
The Economist
compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And everyone from BMW, to Nike, to the U.S. Air Force is already using it every day. Watch The Motley Fool's shocking video presentation today to discover the garage gadget that's putting an end to the Made In China era... and learn the investing strategy we've used to double our money on these 3 stocks. Click here to watch now!

An abbreviated transcript of the video: 
Hey Fools, it's John Rosevear. So is Ford getting closer to a profit in Europe? Ford of course has lost big bucks in Europe over the last couple of years. Ford Europe lost $1.75 billion last year, and back in January the automaker warned that it could lose $2 billion this year. But things have improved more quickly than anticipated, and they've since improved that guidance, now saying that they'll lose less in 2013 than they did in 2012. And it's not because Europe's car market has improved, it really hasn't. New-vehicle sales in Europe continue to be near 20 year lows. But the turnaround plan that Ford launched in the fall of 2012 is already starting to do some good. Ford Europe chief Stephen Odell recently told  Reuters that Ford's goal of turning a profit in Europe in 2015 is now within reach. Part of the reason is that Ford is in the process of launching a whole bunch of new models, expanding its lineup in Europe to capture sales it wasn't previously competing for. That has allowed Ford to post some retail sales growth, and retail market share growth, even while the overall market has continued to be lousy. Ford now says there will be 25 new or refreshed models for Europe over the next five years. The next all-new model coming to Europe is the EcoSport SUV. This is a subcompact SUV, it shares a platform with the Fiesta, that'll give you an idea of its size, and Ford makes it in a plant in India and will export it from India to Europe, as an entry-level affordable SUV. It'll arrive in Europe early next year, and later in the year Ford will bring the all-new Mustang to Europe. Odell says that the Mustang isn't coming to Europe to rack up massive sales numbers, it's more about boosting Ford's image, making the brand more appealing to a wider audience. But Ford still has more work to do in Europe, along with all of those new product launches. There are significant cost cuts under way. Ford is closing a plant in Belgium next year, which will eliminate over 6,000 jobs. The costs associated with that will cost Ford $400 million just in 2013, but Odell says that the annual savings should be at least that much once the plant is closed. Ford already closed two smaller plants in the UK earlier this year. Long story short, look at it this way. Ford made $8 billion before taxes in 2012. If Europe had just broken even, that would have been almost $10 billion. When we look back in a few years on Ford's profits from 2012 to 2015, we're going to see a big increase just from this Europe restructuring. So good news for Ford shareholders here as this effort looks to be very much on track. Thanks for watching, and Fool on.


Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 08, 2013, at 7:24 PM, SkepikI wrote:

    <And it's not because Europe's car market has improved, it really hasn't. New-vehicle sales in Europe continue to be near 20 year lows. But the turnaround plan that Ford launched in the fall of 2012 is already starting to do some good.>

    If F management executes as well as they did in US, 2014 will have a very good story unfolding as we watch. Among the more useful observations I've seen out of various Auto analyst murk.

    Thanks and thanks for the transcript

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2752024, ~/Articles/ArticleHandler.aspx, 12/18/2014 3:13:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement