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Ford ready to lose market share in Europe

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Ford ready to lose market share in Europe

Paul McVeigh

and Douglas A. Bolduc

Automotive News Europe -- June 23, 2010 13:19 CET

BILBAO, Spain -- Ford Motor Co. is ready to sacrifice market share in its European markets to concentrate on profits as its new-car sales plummet after the phasing out of scrappage incentives.

Ford has been one of the main beneficiaries in Europe of government schemes that paid owners to trade in old cars for new models.

But 10 months of consecutive monthly volume gains came to an end in April when Ford's sales fell 17 percent in the company's main 19 European markets. The decline continued in May with a 14 percent drop.

Ford of Europe CEO John Fleming said the division made the choice that profit is more important than share. "We can't give up on total market share, but we want to try and find the right balance so we can remain profitable this year and not dilute the brand," Fleming said at the Automotive News Congress here.

Earlier this month, Ingvar Sviggum, Ford of Europe's head of marketing, sales and service, said Ford is prepared to lose European market share and sales "in a controlled way."

"We've long been prepared for the slow-down in the market and are not surprised that many of our competitors continue to react with the tactic of heavy discounting, which we believe is ultimately unsustainable and damages the brand," he said in a statement.

"In the face of such difficult market conditions, we have put in place a simple, consistent and effective plan -- we will grow our volume and share where it makes good business sense to do so, such as in Turkey. We will reduce in a controlled way our share and volume in the areas of our business that are less profitable."

Ford's market share in its main 19 European markets in May was 8.2 percent, 0.7 percentage points down on May 2009.

Despite its volume decline, Ford remains Europe's No.2 best-selling passenger car brand year-to-date after Volkswagen. Ford sold 598,400 new cars in the first five months, down just less than one percent on the year before.

The Fiesta continued to be Ford of Europe's No.1 top-selling new car, with 204,000 units sold during the first five months.

Ford expects a sales boost this year from the launch or unveiling of more than 11 new models and derivatives, including face-lifted S-Max and Galaxy large minivans already on sale and the new C-Max and Grand C-Max medium minivans that will go on sale in the second half of the year.

For the first quarter, Ford of Europe reported a pre-tax operating profit of $107 million, compared with a loss of $585 million a year ago, largely helped by sales gains as customers used scrappage bonuses to buy the automaker's Fiesta and Ka models.

Read more: http://www.autonews.com/article/20100623/ANE/100629954/1193#ixzz0rgZVeoJ2

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