Ford Reviewing European Product Lineup

[mackinaw]

From Bloomberg:

 

“Our results in the last 12 months in Europe are not acceptable and we need to address that situation,” Stuart Rowley, Ford’s controller, said today at a JPMorgan Chase & Co. auto conference in New York. “We are looking at our plan and will address all aspects of our business, looking at our structural costs, our product portfolio and our brand.” Analysts such as Morgan Stanley’s Adam Jonas have been suggesting that Ford close one or more factories in Europe. The automaker is using just 63 percent of its production capacity in the region, according to Morgan Stanley. Ford’s second-quarter net income fell 57 percent to $1.04 billion as operating losses in Europe widened to $404 million. “Cost alone cannot get us to where we need to be,” Rowley said. “Look at our North American business, that’s a good guide. We continued to invest in our product plan.”

 

Full article here:

 

http://www.bloomberg.com/news/2012-08-14/ford-reviews-product-lineup-in-effort-to-stem-losses-in-europe.html

[BORG]

I don't understand Ford's European market, do they have some soft spots in their portfolio?

[jpd80]

I don't understand Ford's European market, do they have some soft spots in their portfolio?

The market is heavily biased to Fiesta and Focus, those are the two best sellers for Ford

[lfeg]

It may not be that there are soft spots in their product lineup, but what segments the heart of the lineup are in. As jpd80 states, Focus and Fiesta are the heart of the lineup. And they are in the most crowed, competetive, and price sensitive segments where a great amount of excess capacity are. Not that all is doom and gloom, but if the heart of your lineup is in the toughest segments it does make life more difficult.

[akirby]

I don't understand Ford's European market, do they have some soft spots in their portfolio?

 

According to Biker16 the European market is perfect and every vehicle they make is a home run and Ford is stupid for not selling all of them here.

[ausrutherford]

"Looking at the portfolio"

 

In other words, "we are adding models, more expensive models"

 

We can read that as the Mondeo based 4 door coupe or something like it is a go.

[Edstock]

Obviously, it's time for the return of the RWD Cortina . . .

[grbeck]

From what I've read, part of the problem is that many Europeans receive their cars as a company "perk" (to avoid high income taxes). Hence, many people want premium brands, as they aren't really paying for it. This has squeezed the traditional "mass market" brands, but helped the premium (meaning, largely German) brands.

[silvrsvt]

"Looking at the portfolio"

 

In other words, "we are adding models, more expensive models"

 

We can read that as the Mondeo based 4 door coupe or something like it is a go.

 

No they need to start selling Lincolns there!

[jpd80]

"Looking at the portfolio"

 

In other words, "we are adding models, more expensive models"

 

We can read that as the Mondeo based 4 door coupe or something like it is a go.

Hybrid C-Max in Valencia?

[theoldwizard]

This statement can be interpreted many ways

 

“We are looking at our plan and will address all aspects of our business, looking at our structural costs, our product portfolio and our brand.”

 

I read that as

• We have excess capacity in EU
  
• The excess is NOT just based on the current economic situation in EU
  
• To get capacity inline withe future sale projection, we will have to close some plants
  
• Closing some plants will mean dropping some product lines and/or converting the remaining facilities to flexible manufacturing so that they can build the vehicles that are in demand at that time.
  

The brand part only makes sense if they are contemplating dropping the Mondeo which is the "big"/premium car in EU. That would leave Ford as only a small and medium (B and C platform) size car and truck manufacturer. Would that impact the customers image of Ford ?

[jasonj80]

"Looking at the portfolio"

 

In other words, "we are adding models, more expensive models"

 

We can read that as the Mondeo based 4 door coupe or something like it is a go.

 

That is why vehicles like the Next Mustang and Edge are going to be important for Europe. They will allow ATP's to rise and be in niche markets where the competition isn't as strong with a lot less cash outlay.

[Kris Kolman]

This is exactly the right kind of responce one you expect from a company in the situation Ford is in Europe... And similar to comments made by GM, Fiat, and Renault executives recently. Only car makers in Europe not talking about fundamental structural changes are the Germans, who are silently "putting the screws" to their competitors. I also tend to agree that the product profolio changes are going to be more due to manufacturing capacity changes (plant closings). The real question is how the mass market companies can thrive in a market where government/cultural forces are such that small, low profit margin vehicles are prefered. Nationalistic and protectionist forces are preventing what real needs to happen... Large scale consolidation and scraping of dead-weight...

 

Here's the current lineup for discussion purposes:

- Ka

- Fiesta & B-Max

- Focus & C-Max & Kuga

- Mondeo & S-Max & Galaxy

- Transit Connect

- Transit

- Ranger

 

There is little fat here... New Ka from South America is comming soon and might be imported from South America or Asia (currently built in Eastern Europe by Fiat). New Transit Connect is in work and might be made more common with Focus to enable some manufacturing consolidation. Might be able to make some money from a Mondeo based SUV/CUV (i.e. New Edge). As such the problem is more fundamental... Manufacturing capacity and inerent overhead vs. profit margin per sale.

[silvrsvt]

Might be able to make some money from a Mondeo based SUV/CUV (i.e. New Edge).

 

The S-Max and Galaxie are based on the Mondeo and fall under that description...more or less...they both look like Minivans to me...

[bzcat]

"Looking at the portfolio"

 

In other words, "we are adding models, more expensive models"

 

We can read that as the Mondeo based 4 door coupe or something like it is a go.

 

This is my take too. And not just Mondeo coupe but a prolifiration of other derivatives - not bigger cars per se, but more expensive ones.

 

I think they are taking more of a FIAT500 or Citroen's DS line approach and say what else can we do with this basic architecture (or platform, whatever) and add higher profit margin models? FIAT 500 and FIAT Panda share the same platform but 500 sells at a premium. Citroen C2 and DS3 is another example.

Edited August 17, 2012 by bzcat

[ausrutherford]

Moving the Ka back in house will be huge too.

[jpd80]

The S-Max and Galaxie are based on the Mondeo and fall under that description...more or less...they both look like Minivans to me...

Galaxy (not Galaxie - lovely car btw) will stay as a minivan but S-max is more of a crossover and will be morphed into new CD4.2 Edge.

If Europe drops import tariffs, maybe Ford could look at closing plants and import some products form other regions.

Edited August 18, 2012 by jpd80

[RichardJensen]

the Germans, who are silently "putting the screws" to their competitors.

Yeah, kind of. Having read VW's annual report, I'm not impressed by the character of their profits, and thus am not inclined to view their current course of action as a sustainable one.

[twintornados]

Obviously, it's time for the return of the RWD Cortina . . .

Oh....you just HAD to say that...... (waiting on Jelly to come roarin' in here now...)

[Biker16]

having the mustang and even the next generation taurus, RWd I hope or even AWD, increase ASP.

 

I think they are trying to do this with the B-max, and the next generation C/D cars Mondeo, S-max and Galaxy, by making them more premium.

 

Selling lincoln there would be futile, the lineup is garbage compared to the makes in the EU.

 

I like what VW is doing by putting pressure on their comptition to contract, they will be in a much better position when the market recovers.

[timmm55]

 

 

I like what VW is doing by putting pressure on their comptition to contract, they (Ford???) will be in a much better position when the market recovers.

 

It's not unlike what the Big Three did to Packard et al in 1956. They put the squeeze on the Independents by cutting prices and cheap financing. It really didn't help GM or Ford. But really screwed the Independents.

[jpd80]

I like what VW is doing by putting pressure on their comptition to contract, they will be in a much better position when the market recovers.

It's very similar to a GM styled Incentive war where the person who sells the most wins....

What FoE has to do now is make up its mind whether its products are a bargain based

or affordable quality, price appropriately and then trim models and production to suit.

Edited August 19, 2012 by jpd80

[timmm55]

Ford of Europe has floated the US in the past. Still adjustments need to be made.

[Kris Kolman]

Yeah, kind of. Having read VW's annual report, I'm not impressed by the character of their profits, and thus am not inclined to view their current course of action as a sustainable one.

 

Everything I've read esentially agrees with you, and yet VW seems to continue driving its value down in a futile effort to up market share at all costs. Remember their unrealistic US marketshare goals, or talk of playing with Toyota and GM as the largest brand int he world. They seem determined to follow the old discredited GM "biggest is best" path.

[RichardJensen]

Ford of Europe has floated the US in the past. Still adjustments need to be made.

It's been 30 years since the brief period when the panthers, the F150 and Europe helped bail out the chaos in Ford's passenger car lineup due to the Iacocca/HFII feud.