About Face: Losses in Europe Force Ford to Adjust Five-Year Business Plan

It was once the case that a tumbling American economy had caused problems for automakers like Ford, but now the situation has reversed. Ford is reportedly adjusting its five-year business plan because the automaker expects to lose as much as $600 million in Europe this year, according to Automotive News.

While the European market once seemed relatively immune from reduced car sales, Ford has seen volumes fall in all 19 of the European markets it tracks. That’s resulted in Ford losing a significant amount of money in Europe over the past year. In the first quarter of 2012, Ford suffered a loss of $149 million in the European market, compared to a profit of $239 million there a year prior. Worse still, Ford reportedly expects to lose between $500 million and $600 million in Europe through the end of this year.

The news of dwindling sales in Europe comes as the American car industry turns finally around and recovers. Analysts predict sales here this year may hit their best pace since 2007; Ford reported a first-quarter profit of $2.1 billion in North America this year. However, economic uncertainty in European countries like Greece and Spain is reportedly making Ford nervous about the car market there.

“In Europe, if you go back and look a year ago we didn’t [envision] the type of environment that it looks like we’re going to be living in for a while,” Ford chief financial officer Bob Shanks told Automotive News. “We have to develop a better plan in response to what’s going to be a much less favorable external environment.”

Ford’s updated five-year business plan will be presented to top executives in July. A final version of the plan will be presented by December. The five-year plan contains detailed projections that will guide the company’s future decisions.

Source: Automotive News

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