Ford's European Sales Jump 18% As Its Turnaround Continues

By Markets Fool.com

The Ford Kuga is the compact Escape's European sibling. It's a hot product right now: Sales were up over 30% in February. Image source: Ford Motor Company

Continue Reading Below

What's happening: Ford Motor Company said on Thursday that its sales in Europe rose 18% in February.

What Ford said: Ford said that its sales in what it calls the "European 20", the principal markets of Western and Central Europe, rose 18% in February, while its sales for the "European 50", including Eastern Europe and Russia, rose 17%. That latter gain was well ahead of the overall industry's 10% increase for the month, meaning that Ford gained market share.

Those gains are coming via a route familiar to Ford-watchers from results in other parts of the world: SUV sales are booming.

Like consumers in other developed markets, more and more European car-buyers are choosing car-based "crossover" SUVs over traditional sedan models. Crossovers are a Ford strength around the world, and its small Fiesta-based EcoSport and compact Kuga (a twin to the U.S.-market Escape) both saw European sales jump by over 30% in February.

SUV sales should continue to shine for Ford in Europe as the year goes on. The all-new Edge is set to joint Ford's European lineup this spring, and the company said that it expects it overall SUV sales in Europe to grow by about 30% in 2016.

Continue Reading Below

But SUVs aren't the only story here. Ford is also doing well in other market segments. Sales of the Mondeo sedan, Europe's version of the Fusion, were up 19%, while sales of the midsize S-Max and larger Galaxy minivans more than doubled versus the year-ago month.

Why it's significant: Ford's market share in the European 20 rose 0.3 points to 7.5% in February, while its share in the European 50 rose 0.4 points to 7.3%.

Those market-share gains are further confirmation that the European overhaul kicked off by former Ford CEO Alan Mulally in 2012 is continuing to bear fruit. Ford made several major moves to stem a tide of red ink in Europe, including a series of cost cuts. But it also made a decision to bring more of its global products to its European lineup.

The new Ford Mondeo, a twin of the Fusion, is selling much better than the older Europe-only model it replaced. Image source: Ford Motor Company

That move is looking smart right now, with the Edge set to arrive amid white-hot demand for crossover SUVs. Meanwhile, the Fusion-based Mondeo, which replaced an aged Europe-only model, has generated much better sales (and likely substantially fatter profits per sale) than its predecessor.

What's next for Ford in Europe: Ford Europe returned to profitability in 2015 after several years of red ink, and the company has guided to a better result in 2016. But Ford isn't counting on strong sales alone to boost its European profits and margins: Europe chief Jim Farley has signaled that the company is starting another round of cost cuts in the region.

That said, more new products are on the way. The new Edge will be joined by a revamped Kuga, which is getting an overhaul along the same lines as the refreshed-for-2017 Escape. Ford will also revamp the midsize Ranger pickup later this year, and it's adding top-of-the-line "Vignale" trims to the S-Max, Edge, and Kuga in a bid to improve per-sale profits.

The new Vignale models will join the Mondeo Vignale, which is similar to the Fusion Platinum that will be added to Ford's U.S. lineup later this year.

The article Ford's European Sales Jump 18% As Its Turnaround Continues originally appeared on Fool.com.

John Rosevear owns shares of Ford. The Motley Fool owns shares of and recommends Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.