The change in strategy was announced, during the presentation of the latest results of the company, by the CEO of Ford Motor Company, Jim Hackett, who, assuming “deeply displeased” with the performance of Ford in Europe, defended the need to “redesign our operations” on the continent, namely, “focusing activity on the most profitable light commercial vehicles and SUVs”.
At a time when the oval's brand already expects a negative year of 2018, after still having achieved profits of 234 million dollars (just over 200 million euros) in 2017, the financial director of Ford, Bob Shanks, even considered the current European range of vehicles from the American brand, “unable to generate profits”. Mainly due to the fact that it is focused “on saloons and multi-activity vehicles, like the C-Max”.
Also according to the same source, proposals like Ford Transit, SUV Kuga and the Ranger pick-up, as well as some “imported” vehicles — although without confirmation, Shanks is talking about the SUV Edge and the muscle car Mustang — are those that are making the most profit for Ford in Europe, having guaranteed 200% more profits than expected, even though they do not represent half of sales volume and revenue.
Brexit among the culprits
Also contributing to the fall in Ford's profits is Brexit. Which has led to a fall in the value of the pound, harming the brand's operations in what is its most important market, in Europe.For Ford's head of global markets, Jim Farley, Britain's decision to leave the European Union explains “much of the deterioration” in the manufacturer's profits in Europe.
Jim Farley, Ford Global Markets DirectorIn 2016, we made 1.2 billion in Europe, most of which in the UK. With Brexit and the pound continuing to fall, our business in Europe has seen an increasing slowdown.
More SUV on the way
At a time when Ford already sells three SUVs in Europe — EcoSport, Kuga and Edge —, with the EcoSport even achieving a sales record in the second quarter of 2018, the oval brand assumes, therefore, the launch, by 2020, of several new products for crossover and SUV lovers.
As for models such as the C-Max MPV, whose sales will have dropped about 18% in the first half of 2018, to 31,888 units, according to data from the consultancy JATO Dynamics, they are now in danger of disappearing. The same happens with the Mondeo saloon, which in the US, where it bears the name Fusion, has already confirmed death for 2020; with S-Max and with Galaxy.
Investment and partnerships are also part of the strategy
In addition to this redesign of the range, the Dearborn manufacturer is also planning to redirect investment towards the development of new products, for SUVs and light commercial vehicles. This, while trying to make the new models reach European markets faster.
The decision to close the transmission plant that Ford owns in Bordeaux, France has already been taken, in case no one is interested in the purchase, until the end of the year.
Alongside these measures, Ford also intends to reinforce the partnership policy, as a way to achieve a faster return to profits. In this way, continuing the strategy that has already led to the conclusion of a long-term collaboration with the French group PSA and, more recently, to a partnership with the Volkswagen Group, in the field of light commercial vehicles.
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