Euro Fiesta

Ford's Fiesta is its best-seller in Europe, and the latest version is finding new fans. Sales are up 9% in 2014. Source: Ford Motor Company.

The numbers have been terrible: Even while a dramatic turnaround was boosting profits in North America, Ford (NYSE:F) was losing a fortune in Europe. Ford's European division posted losses of $1.75 billion in 2012 and $1.6 billion in 2013.

But there are signs of progress: Ford actually posted a small profit in Europe last quarter, although it warned that more losses are likely later this year, and sales in Europe were up big last month.

A big jump in sales last month
Ford said last week that its sales in Europe were up 14% in August, handily outpacing the overall industry's 2% gain. Year to date, Ford's sales in the region are up just over 7%, ahead of the market and a pleasant surprise after several years of declines.

European new-vehicle sales have been hammered by deep, protracted recessions in several key European markets; at one point last year, sales hit lows not seen in two decades. A fragile recovery has started to take hold, but Ford's recent results are well ahead of the averages.

That means that Ford is gaining market share. In a market dominated by big regional players like Volkswagen, Renault, and General Motors' German subsidiary Opel, Ford has more than held its ground.  Ford's overall market share in Europe was 7.9 percent through the first eight months of 2014.

Even better, Ford's retail market share is up 2 percentage points, to 8.5 percent in August. 

Why is that even better? Because Ford's turnaround strategy for Europe is emphasizing retail sales over less-profitable rental-fleet sales, and it appears to be working.

Overhauled Ford stalwarts join models new to the Old World
Ford is gaining ground in Europe with a slew of much-improved new products, just as it did in the U.S. a few years ago. The company said that more than half of the vehicles it has sold in Europe this year are models that are either all-new or have been significantly refreshed since the beginning of 2013.

Tops among them is the recently revised Fiesta. It's Ford's best-seller in Europe and one of the region's top-selling cars, and it's up 9% this year. A heavily refreshed version of the one-size-up Focus is due in Europe (and the U.S.) this fall; that's expected to give Ford Europe sales another boost. 

Meanwhile, the SUV boom has made its way to Europe. Europe's current Ford Kuga SUV is a twin of the U.S.-market Escape; sales are up over 32% this year. Ford just expanded its European SUV lineup with the tiny EcoSport, originally developed for emerging markets, and the upcoming all-new Edge will also be added.

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European sales of the Ford Kuga, a twin to the Escape, are up 32% this year. Source: Ford Motor Company.

Ford's commercial vehicles are also selling well in Europe, just as they do in the U.S. Its line of Tourneo and Transit commercial vans are very popular, and Ford's Ranger pickup also has a following among commercial buyers. European sales of Ford commercial vehicles are up 12.7% so far this year, and Ford's share of that market is up 0.6 percentage points, hitting 10.8%.

More new Fords are on the way to Europe, including the Mustang
There are more new Fords on their way to the Old World. The Mondeo, a midsize sedan that was launched way back in 2007, will finally get a replacement later this year. It's a familiar one: the car that we know in the U.S. as the Fusion.

The new Fusion-based Mondeo should give Ford's sales another shot in the arm. And the official arrival of Ford's new 2015 Mustang in Europe will help boost Ford's image further.

Ford Mondeo Range Europe

A familiar face with a different name: Ford Europe's new-for-2015 Mondeo is a twin to the U.S.-market Fusion. But there's a twist: Along with the sedan, a Mondeo wagon will be offered. Source: Ford Motor Company.

Ford has made great strides toward reducing expenses in Europe. Two underutilized factories in the U.K. were closed last year, and a big plant in Belgium that produces the outgoing Mondeo is set to follow suit shortly

But no business can rely exclusively on cost-cutting for long-term success. That's why former Ford CEO Alan Mulally's plan for Europe included new models and an emphasis on profitable retail sales. So far, it seems to be working.

John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.