Ford of Europe chasing profit, not market share

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.
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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)