It has been three years since General Motors finally washed its hands of Opel and Vauxhall. After 17 straight years of losses totalling $20bn (currently £16.5bn) from its European division, it sold the business to the PSA Group.
That PSA quickly made the twin brands profitable shows how brilliant an operator Carlos Tavares is. But in the hands of mere mortals, Opel-Vauxhall’s performance under GM shows how hard it has been for US manufacturers to make Europe a successful outpost for their empires. GM hasn’t been the only American giant to have success elude it in Europe. Ford has had its own high-profile problems here, losing money in 12 of the 20 years before 2018, which meant a decision one way or the other needed to be taken.
Last January, Ford boss Jim Hackett announced his global restructuring plan – and Europe remained part of it, putting an end, at least temporarily, to two years of whispers from analysts and investors about whether Ford would ‘do a GM’ in Europe.
Restructuring in Europe includes Ford making redundant some 12,000 of its 51,000 European staff, factory closures – including Bridgend – and an overhauled model range that will include more SUVs, a growth area Ford was slow to respond to.
But then the pandemic hit, and it has hit Ford hard. Its first-quarter global operating loss was £500m this year, and Ford predicts that it could be as much as £4bn in the second quarter. It’s trying to save cash where it can, including by delaying new model launches, pushing back its autonomous vehicle programme and cancelling a joint venture between its Lincoln premium brand and electric car start-up Rivian. Yet eyes have turned to Europe once more, considering whether it’s somewhere Ford really needs to play.
So it has been asked again: will Ford follow GM out of Europe? “It’s too early to conclude,” says Felipe Muñoz, Jato Dynamics’ global analyst. “However, the current outbreak is going to have consequences on the way the industry operates. We will likely see more collaboration, agreements, alliances or even mergers.”
On that point, Ford is perhaps ahead of the game. It announced in 2018 an alliance with the Volkswagen Group, with the two committing to develop commercial vehicles (CVs) together. And it’s CVs where Ford is at its strongest in Europe. It’s the leader in this high-margin market, and it’s said that while Ford doesn’t make money on many of its cars, it does on its CVs.
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Inevitable
Regardless of what you think of Ford's European management and the interference from the bosses in Detroit (who couldn't see how the market was moving to premium vehicles such as JLR models) their loss of market share (the brand became devalued and vulnerable to uninspiring but well built and good value cars from the Koreans) means Ford no longer have the economies of scale to even compete in the (low margin) B and C class car market. They have never really established themselves in China or India and withdrawn from sedan sales in the US who never loved their popular European hatches. Ford will have no alternative but to throw on the towel and import their crossovers and SUVs from the US. Only European operations will be van manufacturing in Turkey. EV production contracted out to VW if they need to continue to meet fleet average C02. As in so many areas Coronavirus is massively accelerating change and tough decision making. I wouldn't be surprised if US bunker down by increasing tariffs on car imports to try and let their indigenous industry improve its market share.
"Only European operations will be van manufacturing in Turkey"
Did I miss something? When was was Turkey admitted to the EU? Have they been given the Uk's place at the table?
European Ford manufacturing
3% of Turkey is in Europe (continent of), so the term "European manufacturing" is referring to the geographical location of plants. Just as the UK is within the continent of Europe, irrespective of politics!
Ford's Europe problem is they are dependant on the UK.
Ford's biggest problem is that it makes all it's cars/vans in the EU & Turkey & yet sells most of them in the UK!!! Even before the Coronavirus crisis Ford had to put it's German Fiesta factory in Cologne on a four day week because the Brits were buying less Fiestas. 35 % of the cars made there were exported to the UK! If there is no trade deal with the EU at the end of 2020, their cars will have an extra 10% tarrif slapped on them. This will make it uneconomic for Ford to sell cars in Britain their biggest European market.
Five years ago GM started collabrative projects with PSA, & eventually concluded that it was getting very difficult because of upcoming EU legistration to make money selling cars in Europe so eventually offloaded Opel/Vauxhall on PSA. Ford have now started collaborating again with Volkswagen. They (Ford) are now only selling what used to be "world" cars like the Fiesta, Focus & Mondeo only in Europe. This makes their replacement costs very much more expensive. You bet Ford will do the same as GM & offload the European operation on VW. Dagenham operations hasn't got a future because Diesels haven't got a future in Europe....
It doesn't matter...
The Britsh only want metallic grey VW's and Audi's.