August 17, 2012
The mess in Europe affecting Ford’s profits 0
Ford is performing wonders in their home country of North America and is progressing well in the emerging markets of India and China. However their profits are expected to be heavily affected in a negative manner thanks to the Euro Zone crisis.
The company made great losses in the second quarter, losing as much as $570 million from operations outside of the United States it has been rumoured.
Ford are said to be analysing the damaging effects of the sales slowdown in Europe, with profits guaranteed to be lost.
The problem at the moment is that Europe, a once booming car market is now crippled with debt and political issues. This has caused the car industry to suffer, especially the mass car market. The target market consists of families who are struggling to make ends meet, sacrificing certain expenses which include the purchase of new cars.
There is an over capacity problem at the moment in the country, with more cars being produced than what is being demanded. This has affected the likes of Ford, Vauxhall, Peugeot and Citroen just to name a few. Ford in also the mix. All companies have had to react to the sudden twist in buying patterns which unfortunate consequences throughout.
A closure of a factory in Europe is being spurned about as a possible route of action by Ford. However this has since been denied by Ford, leaving many workers who worried calm, for now.
Ford’s shares have since decreased since the news was released.
The news represents a strange turnaround for Ford. During the global financial crisis in 2008 – 2009 Ford’s operations were making more money in Europe than North America. Patterns have reversed. Sales in America have dramatically increased whereas sales in Europe are a terrible low point.
Ford’s position is still number one here in the UK, with the Fiesta being the top selling vehicle for many years now. However the company’s position in Europe has worsened dramatically.
Ford released a statement saying “Given our strong presence in the region, we are impacted by the serious economic crisis, compounded by an intensifying competitive environment as manufacturers react to lower consumer demand and excess production capacity,”
Ford’s operations in South America are also under strain with government policies and difficulties in pricing.
Will Ford’s situation in Europe improve?