By on July 25, 2012

Ford announced a second-quarter net profit of $1 billion, which was better than analysts expected. That’s the good news. The bad news is that Ford expects to lose more than $1 billion in Europe this year. Earlier this year, Ford forecast an annual loss of between $500 million and $600 million, Reuters says.

“As we look over the next five years and lay out all of our plans for our business, we just think the situation in Europe is going to be challenging,” CFO Bob Shanks said today.

Ford lost $404 million in Europe in the second quarter.

 

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13 Comments on “Ford Beats Expectations, Expects $1 Billion Loss In Europe...”


  • avatar
    th009

    European losses in the first half were $550M so that pace over the full year would add up to $1.1B, pretty close to Ford’s forecast of “over $1B”. But second-quarter losses were $404M; if this pace continues (or worsens) the final European number could be much uglier yet.

    Ford’s first-half market share is down from 8.3% to 7.7% (according to Ford) and in June from 8.1% to 6.8% (according to ACEA) but Ford is losing money on each car. So what to do — fight for market share with discounts, and lose even more money per car? Or cut production and sales even further?

    • 0 avatar
      highdesertcat

      Yeah, this is scary, especially when you consider that we, in North America, are not quite out of the woods yet when it comes to our economy and unemployment.

      There are still over 3-million homes that are waiting to be foreclosed upon. That’s going to have an effect on new car sales, as will the current insecurity experienced by businesses, large and small.

      A billion here, a billion there. It adds up.

  • avatar
    mike978

    It is interesting to see data from just one region (rather than global profits/loss). Is there data out there detailing Honda, Toyota and the other major Japanese companies profits or losses in Europe. It would be good to know if the loss issue was an American and European company (exception VW) issue only.

    • 0 avatar
      alluster

      “Is there data out there detailing Honda, Toyota and the other major Japanese companies profits or losses in Europe.”

      Japanese companies breakdown profit/losses by continent. You can see it in their annual earnings report. Toyota’s reports for example can be found at..
      http://www.toyota-global.com/investors/financial_result/2010/
      Click on the financial year to the left and click on “earnings release presentation”. For Europe, Toyota lost $1.8B in FY2010, lost $423M in FY2011, made $160M in FY2011 and made $217M in FY2012. Those numbers may not mean anything depending on how a profit/loss is booked. Japanese automakers with negligible European production could be booking European losses to their Japanese operations, where the vehicles are originally assembled. Makes sense, cause there is no way Toyota lost $13B in the last 4 years or an average of $3.25B a year on Japanese operations as a result of unprofitable sales in Japan alone. Part of the losses had to have been unprofitable exports due to exchange rates.

  • avatar
    GS650G

    Considering the state of the EU is it any wonder Ford is losing money there? GM is doing badly too.

  • avatar
    Spartan

    What exactly is the problem in the EU for Ford?

    • 0 avatar
      Off a Cliff

      most car companies are suffering in the EU, with the exception of the Germans and (possibly) the Koreans.

    • 0 avatar
      bd2

      Pretty large decline in sales means overcapacity problems for most automakers in Europe – which has led to deep discounts/pricewars in an attempt to keep marketshare from dropping too much.

      Hyyundai/Kia are one of the few that are expanding capacity (the German luxury makes like MB would be another – new A Class).

      Even VW has seen a slight sales decrease from 2011 but they are in much, much better shape than the French or Fiat.

      GM, unlike Ford, has Chinese sales to help partially offset their European losses.

    • 0 avatar
      Viquitor

      I was looking at http://www.ford.de, and to me they have a pretty bold lineup.

      Thinking about the whole Chevy/Opel discussion, I get the feeling that european cars have become too expensive to survive the ongoing crisis. Ford is a great example of this. The current Ka is far more sophisticated than the last generation. So does the Fiesta, the Focus and the rest of the gang. The same goes for Opel, Renault, Peugeot and Citroën.

      Maybe it’s time to go back to basics, to build simpler, cheaper cars. Then again, Volkswagen is way ahead of it with the Up!.

      • 0 avatar
        mike978

        When I was back in the UK recently on vacation I read that 70% of Ford’s volume in the UK (it’s largest European market) is down to just two cars. The Fiesta and the Focus. They might contemplate doing a Renault and reducing their range of vehicles because it costs money to make niche vehicles (in terms of sales) such as Ka, Fusion, S-Max, C-Max. I excluded Mondeo because that at least is shared with the US now.

  • avatar
    86SN2001

    Good thing we have One Ford. That amazingly shortsighted idea will soon be the reason that FOA will soon have a cash problem. If the mediocre products don’t work in Europe, they CERTAINLY won’t work here.

    Once the wave of good will towards Ford here (because they took taxpayer dollars eventhough they say they didn’t) in the states begins to wear down, the profits will dry up.

    Ford has already botched the Focus and Focus Wagon launches with the Focus Wagon seeing two recalls in a week.

    Add to that the dismal sales of once great products (Explorer, Escape, Taurus, Focus, Expedition, etc) and soon Ford is going to be in a lot of trouble.

    They know it already…which is why they are scrambling to update their appliances every two or three years…to try and eek out every sale they can.

    People are already dumping F stock…

    • 0 avatar
      RobertRyan

      The situation for Ford Australia, became a lot worse after they introduced “One Ford”. What genius came up with the concept? There is no “One VW, One GM, One Toyota” all three are doing a lot better than Ford Globally.


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