Is Ford Motor Company's Latest Turnaround on Track?
Ford's European commercial-vehicle lineup has been posting big sales gains. Photo credit: Ford.
Ford's turnaround in the U.S. has been strong -- so strong that the profits from the automaker's North American division have carried the company while it continues to work on its operations in other parts of the world.
Unlike North America, Ford's European business is still losing money, and lots of it. Ford lost $1.6 billion in Europe last year and $1.7 billion in 2012. But things are slowly changing: The company's restructuring plan has cut costs, while strong new models -- and a shift in strategy -- has helped Ford post some sales gains.
In this video, Fool contributor John Rosevear looks at Ford's latest sales numbers from the Old World and explains why Ford's European turnaround will be a big deal for the company's stock price.
A transcript of the video is below.
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John Rosevear: Hey Fools, it's John Rosevear, senior auto analyst for Fool.com. It has been a rough few years for Ford in Europe, but things are starting to look up.
Auto sales in the region have been hovering near two-decade lows for a while, but Ford has recently managed to squeeze out some sales gains, and now the overall market looks like it's picking up. The European auto market was up 8% last month, but Ford says that its sales in Europe were up 11.6%. Ford says that it gained overall market share, retail market share, and market share in the commercial vehicle market versus where it was in the year-ago month.
That's good stuff.
It's a sign that Europe's market is finally starting to turn around a little, and it's a sign that Ford's turnaround plan is beginning to take hold. Ford lost $1.7 billion in Europe in 2012 and another $1.6 billion last year, but the company says that it's on track to break even by the end of next year.
They've been working on a turnaround plan that has several parts. There have been some cost cuts, Ford has closed two factories in the U.K. and is planning to close a big one in Belgium at the end of this year. But they've also been looking to expand their sales: they've added a bunch of models to the European product line and they've put a bigger emphasis on higher-profit retail sales, and they're working to capture more of the commercial vehicle fleet market, which is a good market for Ford here in the U.S. and in other parts of the world.
Here in the U.S. the commercial vehicle market is a lot of pickups and big vans, in Europe it's more vans of all sizes, the Transit van lineup is very big there. Ford just launched a new 2-ton Transit van to complete their Transit lineup, you can see the whole European lineup in the photo above this video on Fool.com. And that lineup is doing really well. Ford's commercial vehicle sales were up 15.8% in February, and they say their market share for the first two months of 2014 is the highest Ford has seen in 16 years.
This is all good news for Ford shareholders; turning around Europe will give Ford's bottom line a nice boost, and the even better news is that things should continue to improve. Ford says it'll launch 10 new vehicles in Europe in 2014, that new Transit van was one of them, the refreshed Focus will be another one, the Focus is one of Europe's best-selling cars so the refreshed version could give Ford a significant boost. So Ford is definitely making good progress in Europe, this turnaround story continues to play out well, and that's good news for Ford stock. Thanks for watching.
The article Is Ford Motor Company's Latest Turnaround on Track? originally appeared on Fool.com.
John Rosevear owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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