While Ford is slowly but surely gaining traction in North America and China, Europe is storming ahead. Over at paddocktalk.com there’s report on Ford of Europe’s latest sales, which jumped 19.8% in November. This marks Ford’s sixth consecutive volume increase, resulting in a 9.1% year to date market share. “November was another month with outstanding volume gains for Ford of Europe”, said Roelant de Waard, Ford of Europe’s Vice-President for Sales. “Having the right products at the right time is paying off, and this is why we’re continuing to strengthen our position as the clear No.2 choice for customers in the European auto industry.” A key point included how 63% of their sales went to retail customers, which was an increase of 13%. Increase in sales? Increase in retail customers? Increase in market share? It all sounds great! Until you dig a little deeper.
When I read the article, something didn’t sit right. Why did they keep mentioning “volume” and market share? So I did a little digging around and found a website (www.autoebid.com) which specialises in third party broker car deals. Brand new cars at discounted prices. Under the Ford section I found a Ford Fiesta 1.4 Titanium 5 door Auto with 18% off the Recommend Retail Price (RRP). A Ford Galaxy 2.0 TDCi Ghia 5 door Auto with 22.54% off the RRP. A Ford Focus 1.6 Style 5 door Manual with 27.56% of the RRP. A Ford Mondeo 2.0 TDCi Titanium X Sport 5 door Auto with 29.52% off the RRP. In comparison, a Toyota Yaris 1.3 VVT-i TR Auto has 7.75% off its RRP, a Toyota Auris 1.3 Dual VVT-i T2 5 door manual has 8.78% off its RRP and a Toyota Avensis 2.2 D-CAT T-Spirit Auto only has 10.31% off its RRP. In an industry where everyone is aiming for a 10% profit margin, and a scrappage incentive should be keeping other discounts down. This is bad news for Ford. Which now makes me wonder if this increase in “volume sales” is actually a good thing? Is the jump in sales more to do with the fact that there were some fantastic bargains to be had at Ford dealerships? The real test of strength in Europe for Ford will be when it comes to announcing financial results.
I’m not sure that the discount off RRP is an accurate indicator of profitability. It depends where the price is set to begin with and that varies from brand to brand. There are also different discount practices depending on where any given model is in its life cycle. As you correctly stated: The test of an auto maker profitability is in its annual report and until then everything else is mere speculation.
Annual report isn’t even good as that also depends on where the important models are in their lifecycle.
Just for clarification, Ford of Europe posted a 3rd Quarter profit of $193 million so they must be doing something right. This followed a 2nd Quarter profit of $138 million.
Ford has stated that 2010 will be a tough year as the various scrappage programs wind down, but Ford of Europe is still well placed verses competition and their products continue to be very well received by media and public alike.
Kind regards,
Jay Ward
Ford Communications
I guess the real question would be margin and profit. If selling more at a lower price works for Ford, so be it.
I do like all three cars shown in the picture.
Well received products, increasing sales, increasing market share, increasing profits. What color glasses are required to turn all that into bad news?
Cammy is just doing what TTAC does best. Look for rain when it’s nice and sunny.
Is the Ka coming stateside? Looks like a fun piece.
Yep the Ka is coming to America, but not as a Ka, but rather in its native format, the Fiat 500, yes that is what it is underneath, but with a Ford engine.
The Ka doesn’t have a Ford engine. The complete engine lineup is all Fiat.
In some European markets a very high percentage of cars are sold as employment perk so your statement that increasing retail sales is good maybe incorrect for those markets. Selling retail in those countries just means selling cheap cars.