Why Ford Sales Declined In Europe
Ford Motor Company (NYSE: F) saw its sales fall in the months of September and October in Europe. In the month of September, the U.S. automaker’s sales fell by 2.3% on a year-over-year basis, while sales declined by 5.1% in October. This decline followed a 2.8% year-over-year increase in European sales through the month of August in 2016, resulting in overall growth slowing to 1.4% for the year through October.
The year 2016 has been a good one for Ford in Europe, with the company posting a profit of over $1 billion through the first three quarters of the year compared to $259 million in the full year of 2015. There were a few bright spots for the company among its sales numbers over the month of October. Commercial sales, which include sales of commercial vans Transit and Tourneo, continued to do well, growing by 5%. SUV sales were strong with the newly introduced Edge and Ecosport doing well, while sales of Kuga have slowed somewhat.
The decline was largely a result of slowing sales in the key markets of Germany, France and the United Kingdom. Ford’s management has warned that it expects sales in 2017 to slow down as it has increased prices in the United Kingdom, one of the company’s biggest markets in the region, to offset the impact of currency decline. The company will cut production accordingly to keep profitability in control.
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The decline over the last couple of months is worrying since it looked as if Ford was on its way to profitability again in the region. The slow down in sales in key markets hints at new difficulties potentially lurking. These combined with the potential impact of Brexit could result in cancelling out of all the good work Ford has done in Europe over the last four years.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ford Motor
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