July 9, 2014 at 11:17 pm

Ford expects transformation plan to generate profit in Europe in '15

Odell )

Dearborn— Ford Motor Co. expects to turn a profit in its long-troubled European market next year.

In a Wednesday roundtable discussion with reporters, Stephen Odell, president of Ford in Europe, Middle East and Africa, said the automaker’s European transformation plan — which includes cutting jobs, closing plants and revamping its vehicle lineup — is on track or better than expected.

“We are very, very pleased with where we are in the European transformation plan,” Odell said. “We are very much on track.”

Ford said its sales in Europe rose 6.6 percent during the first six months of 2014, compared to an overall industry increase of 6.3 percent. Its market share remained even at 7.9 percent.

The automaker had first-half sales of 605,400 vehicles, its highest total since 2011.

Ford lost $194 million in Europe during the first quarter of 2014, down from a loss of $425 million during the same period last year. Ford will release its second quarter earnings at the end of this month.

The automaker lost $1.6 billion in Europe in 2013.

In 2012, Ford launched an aggressive transformation plan that included introducing new products, strengthening the brand and improving cost efficiency.

Since then, the Dearborn automaker has launched 15 new or refreshed vehicles, and plans to introduce more this year, including a new Focus and all-new Mondeo.

The Kuga compact SUV, launched last year, is increasingly popular, and Odell said Ford has had to ramp up production to meet demand. The automaker is also introducing its new Mustang, and Odell said it sold out of the first 500 pony cars in 30 seconds.

Odell said Ford’s European commercial vehicle lineup — including the Transit cargo van — has the highest commercial vehicle share since 1998.

The new or refreshed vehicles account for 52 percent of Ford sales in the first six months of 2014. Dealer profitability is up about 50 percent in the first half.

“They are substantive launches,” Odell said. “They are not minor launches or refreshes.”

As part of the transformation plan, Ford will close three plants — a Belgium assembly plant, and two plants in the U.K. — by the end of this year that represents 5,700 jobs. Ford last year was plagued by supply constraints of its Mondeo, S-MAX and Galaxy vehicles built at its Genk, Belgium, plant because of protests over the plant’s pending closure.

Odell said he expects the closings to reduce Ford’s vehicle capacity by 18 percent or 355,000 vehicles.

“We have taken the actions we think are necessary to get our capacity utilization levels to where we can have sustainable profitability,” Odell said.

Despite the improved outlook, Odell still said Europe was a fragile situation for all automakers.

“You know there’s another economic shock out there,” he said. “Clearly, Europe has not recovered as an economy... as fast as other parts of the world.”

The biggest challenge remains the availability of jobs, he said.

“The issue I think still inhibiting a faster European recovery is unemployment,” Odell said. “Unemployment rates are still in some markets well above 20 percent.”