Ford of Europe chasing profit, not market share

By Tim Beissmann | June 25th, 2010

Ford of Europe has admitted that its number one priority is to maintain and increase profits, and it will continue to strive for financial stability at the expense of market share as scrappage schemes come to an end.

After 10 consecutive months of growth between June 2009 and March 2010 thanks largely to government incentives to trade in old cars, sales in Ford’s 19 major European markets fell by 17 percent in April and were again down 14 percent in May.

Market share for May dropped 0.7 percent from the year before to 8.2 percent, although Ford still maintains second position overall for passenger cars across Europe, trailing only Volkswagen.

Ford of Europe CEO, John Fleming, told reporters at the Automotive News Europe Congress that balancing profit and market share was a fine line decision, and in the end one that was dictated by the bottom line.

“We can’t give up on total market share, but we want to try and find the right balance so we can remain profitable this year and not dilute the brand,” Mr Fleming said.

His words echoed those of Ford of Europe head of marketing, sales and service, Ingvar Sviggum, who earlier admitted that a controlled reduction in market share would not necessarily hurt the brand.

“We’ve long been prepared for the slowdown in the market and are not surprised that many of our competitors continue to react with the tactic of heavy discounting, which we believe is ultimately unsustainable and damages the brand,” Mr Sviggum said in a statement.

“In the face of such difficult market conditions, we have put in place a simple, consistent and effective plan: we will grow our volume and share where it makes good business sense to do so, such as in Turkey, [and] we will reduce in a controlled way our share and volume in the areas of our business that are less profitable.”

Ford’s before-tax operating profit was $US107 million in Europe for the first quarter of 2010, compared with a loss of $US585 million for the same period last year.

The Fiesta has been Ford of Europe’s strongest performer this year, with around 204,000 finding homes in the first five months.

(with Automotive News Europe)

Bezza

Geez, that almost sounds like common sense!

I’d rather sell 1 car a year for $1 million than 1 million cars for $1. Volume can bring econimies of scale but it also brings a lot of headaches and extra costs.

That wee purple job at the bottom is cute (in another color perhaps).

filippo

That is the latest Ford Ka, designed alongside the Fiat 500 with which it shares many components.

Matt

Looks good, unlike the old one. Ford would be able sell a few of these

Stoney!

Agreed, I had to mouse over the photo to find out the car name and was impressed how much better looking it is now.Nothing advertises better than more cars on the road, over TV, newspapers or radio ads. Nothing beats seeing it in the flesh or someone thinking I like the look of that car what is it, and gets a closer look.

Stoney!

filippo

It’s funny how journos have always said that the Fiesta was a Ka replacement, when in fact it is significantly smaller and sits below the Fiesta in the Ford range.

Will they bring it to oz? Not likely as it is still manual and 3-door only. Also, according to some reviews I’ve seen, it’s good rather than great.

AUSTRALIA

They are doing the same thing in AUS
Shak

Bring that KA to the rest of the world, and not only will you increase profit but also market share. There aren’t that many good looking Super Minis out there, and the ones that are available are pretty costly.
Andrew M

Ive always questioned why manufacturers battle it out for bragging rights as having sold the most volume.

Volume rights doesnt really count for anything apart from the public may percieve you as better because you have sold more. But if you have sold the most, consumers may swing away because they may not want to be another sheep.

Good move by Ford, but the tricky bit will definately be finding the balance.
This is a big change for them after long having the #1 seller in Europe.

Dont be surprised if others may eventually follow this ploy after burning themselves out at the top

JooberGTi

True, But really its a double edged sword and can work either way, Toyota has been thriving as the number 1 seller of cars and that recognition does impact the minds of buyers who are generally not akin to having an interest in cars, following the pack is a given mentality of the human race.

I just think you can succeed in either approach (Margin or Volume) really well as long you support the approach top to bottom.

RickH

Ford Australia do the same. They sell less cars but higher profit models which make more money. Holden on the other hand flog off as many Commodes as they can and make nothing.
Hendrik

Ford has had a solid vehicle roadmap in Europe since the MA Mondeo was released in 2007. I’m currently in holland and the Ka is a very popular city car, but remember it’s only suitable for Europe and Asia..

The fiesta is a brilliant car but that’s as small as you need to go in Australia and the US, mainly due to low petrol costs, width of roads and emissions taxes (or lack thereof).

Everything is more costly and the govs tax anything road based here in Europe, if they didn’t then everyone would be driving turbo mondeos and V6 insignias… So enjoy what we have in australia

JooberGTi

And let alone aussies are bigger bodies sideways etc than our european counterparts. I think the Fiesta is small enough.

No doubt Ford will be monitoring the current market of micros in Aus e.g. alto, micra etc and how well these are going in terms of sale and judge the feasibility to introduce the car into the competition.