It's a sight for sore eyes as Ford Motor Company (F -0.08%) is finally gaining well-earned traction in Europe after years of investing capital in its vehicle lineup despite chalking up billions in losses in the region since 2012. Ford's sales in Europe last month jumped 10% on increasing demand for SUVS, commercial vehicles, and its performance lineup. Let's dig into the details.
No matter how you slice it
Ford uses a couple of different measures for its market share and sales, because there are so many different ways to slice up Europe's number of markets and countries. However, no matter how you slice it, the company is eating up available market share.
In Ford's traditional 20 European markets Ford sold 96,900 units, a 10% gain compared to the prior year's January which tacked on an additional 20 basis points of market share to reach 7.9%. Expanding beyond Ford's traditional 20 markets, the Detroit automaker sold 105,200 units in its 50 European markets segment -- that was a 9% increase which was far above the industry's rise of only 3%. That pushed Ford's market share up 40 basis points, in that group of 50 European markets, to 7.6%.
Looking at Ford's SUV lineup, the EcoSport sales increased 50% over the prior January, and the Kuga's sales improved by 19%. Thanks to increasing demand in general, as well as the roll out of Ford's Edge in the first half of this year, the automaker expects to increase its total SUV sales by 30% this year, compared to 2015. Ford expects to sell more than 200,000 SUVs in Europe this year, for the first time ever. That'll help boost sales, margins, and overall profitability.
Ford's performance lineup is also expected to improve significantly in 2016 thanks to the Fiesta ST, Focus ST, and Mustang. Ford expects to sell about 40,000 performance cars this year, which is a 50% improvement compared to last year.
What's even better is that Ford's sales in higher value channels continued to improve last month with retail and fleet sales generating 81% of Ford's car sales in January. That's 300 basis points higher than the prior year's January and a staggering 1,100 basis points better than the industry average.
Ford wasn't the only automaker to post surprisingly good results in Europe last month.
General Motors' (GM 0.49%) subsidiary, Opel, posted 80,000 new vehicle sales across its European market last month. That was good enough for a 10.4% gain compared to the prior January and it marked the brand's best January sales figure since 2011. While GM's Opel brand still trails Ford in terms of market share in Europe, it did manage to gain 40 basis points to 5.75%.
"Our excellent start to the year once again shows that our product offensive is appealing to the taste of our customers," said Peter Christian Küspert, Vice President Sales & Aftersales Opel Group. "The new Astra is a resounding success with an increase of over 43 percent in January. The new Astra Sports Tourer and the new Mokka X will continue to drive sales during the course of the year."
Europe will remain a critical market for both Detroit automakers and General Motors is aiming for its operations in Europe to break even in 2016. As the region slowly begins to generate a larger chunk of profits, it will help both automakers add incremental profits to the bottom line as well as improve overall margins which could even help the companies trade at a higher price-to-earnings ratio -- a metric which they have consistently trailed competitors in.