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Winnipeg Free Press - PRINT EDITION
European woes hit Ford sales in region
DETROIT -- The slowing economy dragged down Ford Motor Co.'s European sales during the first half of the year, with the company predicting the region's overall sales would drop to the lowest level since 1994.
Ford sales fell 10 per cent from January through June in 19 western European markets, and they worsened in June, falling 16 per cent from a year ago, the company said in a statement Friday.
"The economic environment remains very difficult, obviously," Roelant de Waard, Ford's vice-president of sales in Europe, said in a statement.
The report confirms predictions from analysts and many major automakers that Europe will continue to be a drain on company profits for the foreseeable future. Ford has warned its second-quarter profit will be lower than a year ago, in part due to growing losses in Europe. The company reports second-quarter earnings on July 25.
Also Friday, Volkswagen AG reported its global sales rose 8.9 per cent for the first half, but fell 5.7 per cent in Western Europe, excluding Germany.
Ford, No. 2 to Volkswagen in Europe in the first half, said its June sales dropped because it decided not to match heavy discounts from competitors. The company is balancing the need to be competitive on price with efforts to raise the amount of money it earns per vehicle, de Waard said. Ford sold 617,600 new vehicles in its European region during the first half. The Ford brand was the top seller in England, where sales grew one per cent.
The automaker said it expects to gain momentum in the second half as it launches the new B-Max small crossover SUV, a new Fiesta compact car and the new Transit Custom van.
Volkswagen said it sold 4.45 million vehicles worldwide from January to June, including an 11 per cent sales increase for June. It was the best first half since 1973 for Volkswagen-brand sales. But the company warned the second half would be more challenging. VW sales in western Europe excluding Germany fell 5.7 per cent from January through June.
Automakers in Europe began reporting June and first-half sales this week. Through the first five months of the year, passenger-car registrations were down 7.7 per cent, according to the European Automobile Manufacturers Association.
Ford's sinking European sales numbers are consistent with the company's warning of a smaller second-quarter net profit. Although Ford's sales and profits are expected to be strong in North America, chief financial officer Bob Shanks said in a government filing last month the company's overseas losses will triple in the second quarter. He said the second-quarter profit will be lower than last year's $2.4 billion, mainly because operations outside North America, including Europe, will lose $500 million to $600 million. That would be three times the $190 million they lost in the first quarter.
Ford's old models in South America are facing growing competition, and the company is losing money in Asia as it tries to build more plants and expand its offerings there. Ford is also seeing low sales and excess production capacity in Europe.
Ford's report comes after French automaker PSA Peugeot-Citroen, facing diving sales in crisis-hit southern Europe, announced a cost-cutting plan Thursday that would slash 8,000 jobs in France and close a major factory north of Paris.
-- The Associated Press
Republished from the Winnipeg Free Press print edition July 14, 2012 B17
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