Ford's Sales Slip in Europe as Key Markets Slow

The hot new Focus RS has helped boost Ford's sales of high-profit performance models in Europe. Image source: Ford Motor Company.

Ford Motor Company (NYSE: F) said that its sales in Europe fell 1.2% from a year ago, as declines in Germany, France, and the United Kingdom offset gains in southern European markets.

The key numbers: Ford's market share holds amid market declines

Ford sold about 99,900 vehicles in the 20 western and central European markets that it considers its traditional core market in Europe in October. That's down 1.2% from a year ago. But Ford's market share in what it calls the Euro 20 was flat year over year at 7.7%, as the overall markets in Germany and France declined 5.6% and 4%, respectively.

Year-to-date through October, Ford has sold 1,144,200 vehicles in the Euro 20, up 6% from a year ago, with an 8% market share.

For Europe as a whole, including Russia, Turkey, the former Soviet republics, and the countries of eastern Europe (what Ford calls the Euro 50), Ford sold 116,100 vehicles, roughly equal to what it sold in October 2015. Its Euro 50 market share was also unchanged from a year ago, at 7.5%.

Year to date, Ford's sales in the Euro 50 are up 4.8%, and its market share for that period was 7.7%.

What worked and didn't for Ford in Europe in October

Ford has recently begun emphasizing sales results for its "profit pillars," which in Europe include commercial vehicles, SUVs, performance models, and heavily optioned versions of its mainstream products (what Ford Europe calls "high-specification" models).

The results were a mixed bag in October.

Sales of Ford's commercial vehicles as a group were up 5% in October. The group includes Ford's Transit and Tourneo lines of commercial vans (the Tourneos are the passenger versions of the Transit models) and the midsize Ranger pickup. The group has done very well in 2016: Year to date, Ford's commercial vehicle sales in the Euro 20 are up 17.2%.
Ford's SUV sales have boomed in Europe this year, up 38% in 2016 through October thanks in large part to the introduction of the midsize Edge to the European market. Sales of the Edge continued to be solid, with 1,200 units sold in the Euro 20 last month. Sales of the compact Kuga (the European version of the Escape) fell 3.3% to 8,700, while sales of the subcompact EcoSport rose 15% to 4,600.
Ford's performance vehicle line in Europe includes the Fiesta and Focus ST models, the Focus RS, and the Mustang. Sales in the Euro 20 totaled 2,927 in October, up 17% from a year ago. Year to date, Ford has sold 37,907 performance models in the Euro 20, up 73% from a year ago.
Ford Europe's high-specification models include Titanium and Vignale (similar to the U.S.-market Platinum) models and premium versions of the Fiesta and Focus. Ford didn't report October results for the group, but it said that they accounted for "nearly 60%" of its sales year to date, up 1.4 percentage points from the same period in 2015.

A weaker fourth quarter to end a good year for Ford in Europe

Through the first three quarters, 2016 has been a very good year for Ford in Europe. Its profit of just over $1 billion through September is a huge improvement over its $259 million result for all of 2015.

Ford executives continue to be optimistic about the European market. But CEO Mark Fields noted during Ford's third-quarter earnings call that Ford, like rivals, increased their prices in the U.K. in the wake of Britain's decision to leave the European Union in an effort to offset the effects of a weaker British pound. Fields expects that decision to result in weaker sales through the end of the year and into 2017, and he said that Ford would reduce its production accordingly.

The upshot is that Ford expects its fourth-quarter result in Europe to be less impressive than what we saw earlier in 2016 -- still profitable, in all likelihood, but close to breakeven.

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