Ford of Europe to outlast shrinking market by realigning production plans

Ford and Sollers produce the Explorer and Transit with joint venture in Russia

2012/03/27

Summary
Model plans: Ford to launch B-Max, new Kuga, and Focus EV in 2012
New technologies: one-liter EcoBoost engine and telematics system SYNC
Ford to reorganize the production structure of European plants, and to establish a joint venture with Sollers in Russia
Sales volume up by 1.8% to 1.602 million units in 2011, while expected to fall below the previous year level in 2012
Key market conditions: Sales in Germany and Russia increase by 15.7% and 32.3% in 2011
Business results: Pre-tax profit is negative 27 million USD in 2011, expecting to have another negative result in 2012

Summary

Ford of Europe attempts to outlive shrinking European markets due to the sovereign debt crisis by launching a number of new models and realigning production across Europe. Ford will add compact cars, such as the new B-segment model B-Max, and employ the fuel-efficient engine EcoBoost to increase high-mileage models.

Ford's European plants will integrate production by segment to improve capacity utilization and productivity. Meanwhile, Ford and Sollers established a joint venture to expand production in the rising Russian market. Ford plans to produce the heavy SUV Explorer and the medium commercial vehicle Transit at two plants of the joint venture in the Republic of Tatarstan.

Ford of Europe had a sales volume of 1.602 million units in 2011, up by 1.8% over the previous year. According to Ford's projection announced in January 2012, the market scale of 19 European countries will decline to 14 million to 15 million units in 2012 from 15.3 million units in 2010, while Ford expects its market share to stay unchanged from the previous year's level of 8.3%.

The 2011 results of Ford of Europe showed an increase in revenue by 13.3% over the previous year, while pre-tax profits resulted in negative 27 million dollars. Ford expects that the pre-tax loss will balloon to five million to six million dollars, if the European markets shrink in 2012 as expected.