The second-biggest US carmaker, Ford Motor, has two crucial strategies to put in place for the year: find a way to stop surging losses in Europe and lift North American earnings margins as they are the key profit generators.
The automaker recently reported its fourth-quarter results and also opted to lower its expectations for the Ford of Europe division – from the previously predicted $250 million to below $1 billion (the full-year figure in 2014), mainly because of the dire situation in Russia, where the country’s currency remains highly volatile and the auto industry is at the brink of collapse. The European losses came even as revenue soared by $2.2 billion and sales increased over 2013 – the Fiesta for example was the continent’s best-selling subcompact model. In the fourth quarter alone Ford lost $121 million in Russia.
Additionally, Ford’s European worries are in contrast to rivals GM and FCA – which started gaining traction in the market last year. FCA’s chief executive Sergio Marchionne said the company predicts a profitable year for its European operations – also in part due to the lack of any major investment in Russia. GM also reaffirmed its target for a positive outlook this year.
In North America, Ford’ profit margin dropped last year to 8.4 percent from 10.2 % in 2013 – with fourth quarter earnings margins even lower at 7.4 percent. That was in part due to the very expensive transformation of the main product – the full-size F-150 pickup truck, with the new generation adopting an aluminum body.