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.
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:
2-tonne, and a freshened Ranger – Europe’s No.1 top-selling pickup for 2015
“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 Accelerates Transformation Plan In Europe To Build Vibrant And Sustainability Profitable Business