Ford and General Motors are expected to report plunging profits this week, as their operating losses in Europe could amount to a combined $1 billion.
The two U.S. carmakers chose different paths to fix their operations in the region. Ford, which will post third-quarter results on Tuesday, is closing three factories in Europe and cutting 6,200 jobs, roughly 13 percent of its workforce. GM, which announces third-quarter results October 31, said last week it would develop small and mid-sized cars, vans and utility vehicles with PSA/Peugeot-Citroen. GM holds a 7 percent stake of the French carmaker, with which it formed an alliance aimed at cutting losses by sharing costs.
However, neither move enabled GM or Ford to avoid operating losses of more than $500 million each in Europe in the third quarter, according to an estimate from Adam Jonas, an auto analyst at Morgan Stanley, quoted by Bloomberg.
Ford’s move is more radical than GM’s agreement with PSA, which may not be finalized by a self-imposed deadline of October 31. While Ford controls its own destiny in Europe, GM is involved in an alliance with PSA that gets more complicated each week.
Auto sales in Europe may fall to their lowest level in 19 years, according to industry organization ACEA.