Ford: We're Gaining in Europe
Overall sales in Europe may be down, but there's still good news to report.
At least, that's what Ford said on Monday. Once again, the Blue Oval reported a year-over-year drop in overall sales in the 19 markets that it counts as "Europe," down 2.2% in May.
That doesn't sound good, but it compares well with the overall market's 6.2% decline. That gap indicates that Ford is gaining market share despite the grim overall environment.
That's the good news Ford wants to emphasize right now. And while there's certainly a PR desire to put the best face possible on a difficult situation, it might actually be something for Ford shareholders to cheer.
Gaining share in a tough overall market
Ford said that its "total vehicle share" in Europe -- meaning its market share including commercial vehicles -- grew to 8.3% in May, up from 8% a year ago. Ford also said that May saw its highest retail market share in Europe, 8.7%, since the company started tracking that number separately in 2010.
From Ford's perspective, that's a good story because it tracks the company's priorities right now. To help understand why, here's a bit of background.
Ford, like most of the other automakers doing business in Europe, has been hammered by very difficult economic conditions that have pushed overall new-vehicle sales down to levels not seen in about 20 years.
Ford, like General Motors and other rivals, has lost a ton of money in Europe recently -- more than $1.7 million last year and $462 million in the first quarter of 2013. It expects to lose about $2 billion this year, and most experts expect industrywide sales to stay depressed for a while.
Clearly, that's a massive drag on earnings -- and last fall, Ford announced a comprehensive plan to turn that around.
That plan involves some of the things you'd expect, like factory closings and staff cuts. But it also includes several strategies to help Ford make the most of the sales it is getting.
Ford is introducing a bunch of new-to-Europe models from its global product portfolio, hoping to capture more sales in market segments it hasn't previously contested in the region. It's also cutting back on less profitable fleet sales, focusing on the retail market -- and doing so with as few discounts as possible.
An emphasis on the most profitable sales
That's why Ford is making a big deal out of the details in this month's sales figures. The overall numbers look pretty dismal at first glance. But as noted above, Ford is gaining market share among retail passenger-vehicle customers.
Ford also noted that it's gaining retail market share at a high rate in the five biggest European markets: the U.K., Germany, France, Italy, and Spain. It stands at 8.4% for the year through May, up 0.8 percentage points from the same period last year. New products are helping: The all-new Kuga (a twin to the U.S. market Escape SUV) and the new B-MAX (pictured above) are both selling well, Ford said.
But is it really paying off?
Ford has more new products on the way in Europe. The next few months will see the launches of the new Transit Connect van and the EcoSport, a small SUV that is doing very well for Ford in emerging markets.
But is this new emphasis really working to cut Ford's losses? Or is it just giving Ford's PR folks a good story to tell despite tough times? It looks promising from here, but we'll know a lot more when Ford releases its second-quarter earnings late next month. Stay tuned.
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The article Ford: We're Gaining in Europe originally appeared on Fool.com.Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. The Motley Fool recommends General Motors. It recommends and 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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