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Ford beats VW, takes No. 1 spot in Europe

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Ford beats VW, takes No. 1 spot in Europe

But March success unlikely to continue, some expect



Ford, which said Thursday that it was No. 1 in European auto sales in March, used the occasion to say it opposes European aid for General Motors' struggling Opel unit.

"You should not use taxpayer money to restructure your business," said Wolfgang Schneider, vice president of legal and government affairs for Ford of Europe.

The comments were in contrast to U.S. automakers' ordinarily cordial public stances toward each other. Ford, for instance, never criticized U.S. aid for GM and Chrysler during the recession.

GM, having abandoned plans to sell Opel, is seeking about $2.7 billion in loans and guarantees from European governments.

"We're applying for loan guarantees, not grants," said Opel spokesman Stefan Weinmann. "It's not a handout."

Ford also called for closure of some auto plants in Europe.

With sales expected to decline by about 8% in Europe this year, automakers could drop prices to spur sales and keep their factories running, said Michael Robinet, an analyst at the research firm CSM Worldwide.

"That really hurts margins for everybody," Robinet said.

No. 1 in Europe

Ford unseated Volkswagen, but it might have a hard time holding onto that position.

Ford said that sales of its cars and trucks increased 16.1% in its 19 primary markets compared with the same month last year. That result outpaced the industry's 11.5% increase.

"Ford in Europe has weathered the storm quite well," said Walt Madeira, manager of vehicle forecasting for CSM Worldwide. "Ford has fresh product, like the Fiesta, and the Focus is still holding its ground."

But Pete Kelly, senior director of European forecasting for J.D. Power and Associates, said Ford's sales were aided by a license-plate registration law in Britain that always spurs a spike in vehicle sales in March. Britain, Ford's largest European market, accounted for 37.7% of total sales in March.

Ford also has benefited in Europe from government incentive programs similar to last summer's U.S. cash-for-clunkers program.

Those programs are the most attractive to buyers of small cars, Kelly said, and have helped to fuel sales of the Ford Fiesta and Ka subcompacts.

Ford said it sold 68,800 Fiestas in Europe in March -- the highest total for any Ford model on record in a single month in Europe. Ford plans to begin selling the Fiesta in North America by early summer.

Meanwhile, sales of the Ford Focus increased 28.6% and sales of the Ka increased 27%.

But the incentives, called scrappage programs in Europe, expired in Britain in March and are to be phased out in Spain, Italy and France throughout 2010, making it hard for Ford to stay on top.

"In April, they will probably slip," Kelly said.

On Thursday, Ford called on European governments to consider adopting incentives to spur commercial fleet sales.

"The basic idea ... is that scrappage programs would be in place until the crisis has ended," said Wolfgang Schneider, Ford of Europe's vice president of legal and government affairs.

Ford said it expects total industry sales of cars and trucks in Europe to decline to 14.5 million this year, down from 15.8 million last year.

Ford also said Thursday that, as sales decline, Europe's longstanding overcapacity problem will become a bigger issue and criticized governments for propping up their own automakers.

"It basically sustains national champions ... this does not bode well for the overall health of the industry," Schneider said. "It maintains weak players that shouldn't be players."

But industry analysts said it is highly unlikely that many automotive plants will close in Europe because labor laws make it easier for unions to protect jobs than in the U.S.



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