Ford Motor Company is accelerating its transformation in Europe – including new product, brand and efficiency actions – to deliver improved profits in 2016 and a 6-8 percent operating margin for Ford of Europe in the longer term.
Ford’s European strategy calls for a more streamlined and profitable product line; more emotional and experiential brand communications; and a leaner cost structure to lower breakeven and help offset growing regulatory costs.
“In the past three years, Ford of Europe has improved its business in all areas and moved from deep losses to a $259 million profit in 2015. This is a good first step,” said Jim Farley, Ford executive vice president, Europe, Middle East and Africa. “We are absolutely committed to accelerating our transformation, taking the necessary actions to create a vibrant business that’s solidly profitable in both good times and down cycles.”
After closing three manufacturing plants in Western Europe since 2013 and reaching an innovative cost-saving agreement with labour unions in Germany, Ford of Europe continues to enhance its cost efficiency and manufacturing capacity utilization.
Ford today initiated a voluntary separation program in Europe supporting a significant reduction in administrative and selling costs to reach industry benchmark levels of efficiency. With the move, Ford of Europe expects to save about $200 million a year on an ongoing basis.
“We are creating a far more lean and efficient business that can deliver healthy returns and earn future investment,” Farley said. “Our job is to make our vehicles as efficiently as possible, spending every dollar in a way that serves customers’ needs and desires, and creating a truly sustainable, customer-focused business.”
Ford of Europe said it would continue to drive improvements in its manufacturing operations, targeting efficiencies of greater than 7 percent year-over-year going forward, and improving its manufacturing capacity utilization.
Product surge
After launching more than 30 new and refreshed vehicles since late 2012, and increasing market share in each of the past two years and boosting sales 10 percent in 2015, Ford of Europe will continue to strengthen its vehicle line with plans to:
“We are creating a more exciting and distinctive Ford line-up in Europe,” Farley said. “When we play to our strengths, we can compete and win in Europe – even against premium brands.”
Strengthening the brand
Building on its improving brand image in Europe, Ford plans to reach new customers through its exciting new products, increased experiential marketing and best-in-class dealer and customer experience with the completion of 500 new, state-of-the-art flagship FordStores in major urban areas.
Ford is identifying opportunities for new revenue streams in Europe – recurring and potentially higher margin – as part of Ford Smart Mobility. Key areas of focus include customer loyalty, multi-modal transport services, fleet services and ride services.
As an initial step in January, Ford unveiled FordPass – a platform that reimagines the relationship between automaker and consumer. FordPass members can talk to a personal mobility assistant to help with travel arrangements, reserve and pay for advance parking, earn loyalty points, schedule service and much more. FordPass launches in Europe later this year.
FordPass also includes the opening of FordHubs, where consumers will be able to explore Ford’s latest innovations, learn about its mobility services, and experience exclusive events, with the first FordHub in Europe opening in London this year.
“We are investing in Ford Smart Mobility, which will deepen our customer relationships and reduce our conquest marketing costs,” said Roelant de Waard, vice president, Marketing, Sales and Service, Ford of Europe. “There is a huge opportunity in Europe to give our customers what they want, sometimes before they even know it, by anticipating their needs through data and data analytics.”
Ford Motor Company is a global automotive and mobility company based in Dearborn, Mich. With about 199,000 employees and 67 plants worldwide, the company’s core business includes designing, manufacturing, marketing financing and servicing a full line of Ford cars, trucks, SUVs and electrified vehicles, as well as Lincoln luxury vehicles. At the same time, Ford is aggressively pursuing emerging opportunities through Ford Smart Mobility, the company’s plan to be a leader in connectivity, mobility, autonomous vehicles, the customer experience and data and analytics. For more information regarding Ford, its products worldwide or Ford Motor Credit Company, visit www.corporate.ford.com.
is responsible for producing, selling and servicing Ford brand vehicles in 50 individual markets and employs approximately 53,000 employees at its wholly owned facilities and approximately 68,000 people when joint ventures and unconsolidated businesses are included. In addition to Ford Motor Credit Company, Ford Europe operations include Ford Customer Service Division and 24 manufacturing facilities (16 wholly owned or consolidated joint venture facilities and 8 unconsolidated joint venture facilities). The first Ford cars were shipped to Europe in 1903 – the same year Ford Motor Company was founded. European production started in 1911.
Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
• Decline in industry sales volume, particularly in the United States, Europe, or China, due to financial crisis, recession, geopolitical events, or other factors;
• Decline in Ford’s market share or failure to achieve growth;
• Lower-than-anticipated market acceptance of Ford’s new or existing products or services;
• Market shift away from sales of larger, more profitable vehicles beyond Ford’s current planning assumption, particularly in the United States;
• An increase in or continued volatility of fuel prices, or reduced availability of fuel;
• Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;
• Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;
• Adverse effects resulting from economic, geopolitical, or other events;
• Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production constraints or disruptions;
• Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors);
• Single-source supply of components or materials;
• Labor or other constraints on Ford’s ability to maintain competitive cost structure;
• Substantial pension and postretirement health care and life insurance liabilities impairing liquidity or financial condition;
• Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns);
• Restriction on use of tax attributes from tax law “ownership change;”
• The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs;
• Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and/or sales restrictions;
• Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;
• A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller (“take-or-pay” contracts);
• Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments;
• Inherent limitations of internal controls impacting financial statements and safeguarding of assets;
• Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier;
• Failure of financial institutions to fulfil commitments under committed credit and liquidity facilities;
• Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;
• Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
• Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and
• New or increased credit regulations, consumer or data protection regulations, or other regulations resulting in higher costs and/or additional financing restrictions.
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A. Risk Factors” in Ford Motor Company’s 2014 Form 10-K Report, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
