Bloomberg News

Ford European Chief Expects Unit to Turn Profitable in 2015 (2)

September 10, 2013

Ford Motor Co. (F:US) expects its European unit to turn a full-year profit in 2015, the automaker’s regional chief said last night while General Motors Co. (GM:US) said today it expects to break even there a year later.

“We are at bottom,” Stephen Odell, Ford’s European head, told reporters attending the Frankfurt Motor Show. “There are no major signs of uptick but it does feel like we’re running along the bottom.” Odell provided the 2015 date in response to a reporter’s question.

Ford and GM, the two largest U.S. automakers, are working to end losses in Europe as the industry weathers a six-year decline in the region’s auto market. European first-half car sales fell 6.7 percent to 6.44 million vehicles, according to the Brussels-based ACEA industry group.

Odell also said last night at least 25 new company models are coming to Europe over the next five years, 10 more than Ford said in October.

Ford’s sales in Europe rose 7 percent to $7.6 billion in the second quarter. That helped boost Ford’s market share to about 8.1 percent from 7.6 percent a year earlier, the company said in a slide presentation for its second-quarter financial results issued July 24.

CEO’s Challenge

Reviving the company’s European unit is one of Chief Executive Officer Alan Mulally’s main challenges. Dearborn, Michigan-based Ford depends on its profitable North American operations to make up for losses in Europe, which totaled $810 million in the year’s first half.

The automaker in July narrowed its loss forecast for Europe to about $1.8 billion from $2 billion. In 2012, it reported a loss of $1.75 billion.

Auto sales in western Europe fell 5.3 percent last month, according to researcher LMC Automotive. LMC forecasts sales of 11.4 million in the region this year, a 3.2 percent decline from last year and a 16 percent slide from 2008.

The ACEA is scheduled to report figures for July and August registrations Sept. 17.

Ford has closed an assembly plant and a stamping and tooling facility in England and plans to shut its Genk, Belgium, assembly plant by 2014. The moves will reduce Ford’s annual production capacity by about 350,000 vehicles, or 18 percent, Odell said in July.

GM’s View

GM intends to break even in Europe by 2016, Karl-Thomas Neumann, who heads the company’s Opel unit, told reporters today at the Frankfurt Motor Show.

“To really turn it around, we have to grow the top line,” Neumann said. “We need to sell more cars and hopefully get more money for our cars.”

The European auto market appears to be at the bottom and early signs are positive, Neumann said.

“Cars on average are 14-years-old now,” he told reporters. “We’re seeing the first lights at the end of the tunnel. We hope it’s going to start slowly going up. We’re relatively confident that we’ve reached the bottom.”

GM said July 25 its market share in the region narrowed to 8.5 percent from 8.8 percent a year earlier.

GM’s European operations, which mostly consist of Opel and its U.K. sister brand Vauxhall, have lost more than $18 billion since 1999.

Aborted Deal

In 2009, Detroit-based GM agreed to sell a majority stake in Opel to Magna International Inc. (MG), the largest North American auto supplier, and Magna’s Russian partner OAO Sberbank. GM directors later that year voted to keep Opel instead.

Opel’s Neumann is a former Volkswagen AG (VOW) executive who took over running GM’s European operations in March.

GM’s plan to end European losses includes closing its Bochum assembly plant by the end of next year, which would be the first shutdown of an auto factory in Germany since World War II; cutting manufacturing employment; and a pay freeze for remaining employees in exchange for preserving jobs.

GM gained 1.4 percent to $37 at the close in New York while Ford rose 1.4 percent to $17.55. GM shares have climbed 28 percent this year while Ford has surged 36 percent, both outpacing the 18 percent increase in the Standard & Poor’s 500 Index.

To contact the reporter on this story: Mark Clothier in Frankfurt at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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    (Ford Motor Co)
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    (General Motors Co)
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