Ford Motor Company (F) Is Turning It Around in Europe

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Sales of Ford’s hot little Fiesta ST, introduced in Europe earlier this year, have blown past Ford’s expectations. The Fiesta ST will be coming to the U.S. later this year. Photo credit: Ford Motor Company (NYSE:F).

Here’s some good news for automakers (among others): After months of declines, new-vehicle sales in Europe were up 4.3% in July.

Here’s some even better news for Ford Motor Company (NYSE:Fshareholders: The Blue Oval’s sales in Europe were up 8.7% for the month.

Ford Motor Company (NYSE:F) has been struggling in Europe for a while, but recently it has started to show some momentum. It’s impressive to see that Ford more than doubled the overall market’s gains, not least because it means that the Blue Oval is picking up market share in the world’s third-largest auto marketplace.

It also means that the company’s plan to turn around its European operation, which lost over $1.7 billion last year, is starting to work. And that could be great news for Ford Motor Company (NYSE:F) stock.

The storm isn’t over, but the worst may have passed
There’s a sense at Ford Motor Company (NYSE:F) that the worst has passed in Europe, but that doesn’t mean that the storm is over. Ford’s Europe sales chief Roelant de Waard said in a statement last Thursday that “it is too early to say a recovery is under way given the continuing economic uncertainty” in the region.

Still, after so many months of losses, with Europe’s auto sales still not far from 20-year lows, any improvement is welcome. And it’s especially welcome for Ford Motor Company (NYSE:F), which has already taken big strides toward implementing the turnaround plan it announced last fall.

That turnaround plan has several interconnected parts; all together, it will take a couple of years to fully implement, but it’s fair to say that it is already producing results.

But that’s not surprising: It’s essentially the same plan that Ford Motor Company (NYSE:F) used to turn around its operation here in North America.

A familiar plan starts to produce familiar results
The plan involves factory closings and some other organizational restructuring, along with a renewed emphasis on retail sales over less profitable rental-fleet sales, but one big part of it involved a lot of new product for Europe. Ford Motor Company (NYSE:F)’s global operational blueprint is called “One Ford”, and it’s an apt name: A key part of the plan is that Ford builds and sells essentially the same lineup of cars and trucks all over the world.

That means that in a place like Europe, where Ford Motor Company (NYSE:F) has traditionally offered a small lineup of compact and midsized cars and trucks, it’s relatively simple for Ford to bring a bunch of new models to the region. And that’s exactly what the company is doing.

For instance, Ford Motor Company (NYSE:F)’s new Kuga SUV is a twin of Ford’s U.S.-market Escape – it’s the same vehicle under a different name. It replaced an old Europe-only compact SUV with the same name, and it’s a big improvement: Sales were up 33% in July, and Ford recently increased Kuga production at its factory in Spain to keep up with demand.

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