DETROIT — Even during the American auto industry’s collapse three years ago, the Ford Motor Company kept investing heavily in new products for the future. As American auto sales recovered, so did Ford’s revenue and profit in what previously had been its most troubled market.þþNow Ford is gambling the same strategy will work in Europe, where economic conditions are deteriorating and car sales are at their lowest point in 15 years.þþThe company on Thursday said it would introduce several new or refreshed models to bolster its struggling European division, including stalwarts from its American lineup like the Edge sport utility vehicle and the Mustang sports car.þþ“Just like in the U.S., we are going to invest in the worst of times because it will allow us to grow,” Ford’s chief executive, Alan R. Mulally, said in an interview from Amsterdam, where Ford announced its product plans at an event attended by 2,500 of its European dealers.þþRaising the bet in Europe is a daring move for Ford, which expects to lose more than $1 billion in Europe this year.þþThe European auto industry is in crisis. Saddled with high costs and too much production capacity, the region’s automakers must also contend with deep recessions in prime markets like Italy and Spain, where consumers have sharply curtailed car purchases.þþAnalysts say that many of the automakers in the region, including Ford, need to close factories and produce fewer cars.þþIn some cases, more radical action might be necessary. One top auto analyst recommended on Thursday that General Motors, which has lost money in Europe for 12 straight years, sell or even close down its European operations before they undermine the company’s overall comeback from its government bailout and bankruptcy.þþ“One of the worst things in the auto industry is owning a cash burning, resource consuming business,” the analyst, Adam Jonas of Morgan Stanley, wrote in a lengthy research report about G.M.’s Opel unit. “One of the best things is getting rid of that business.”þþG.M. had no immediate comment on the Morgan Stanley report. But the company has replaced top management at its Opel unit and G.M.’s chief executive, Daniel Akerson, has consistently said his goal is to fix Opel and use its product expertise on global platforms.þþMr. Mulally of Ford said he was confident his company can survive the crisis in Europe and emerge as a more formidable competitor when the economy revives. The company is willing to be patient for a recovery that even Mr. Mulally concedes may be years away.þþ“We really don’t know,” he said. “Nobody knows.”þþOne analyst said all automakers in Europe are wrestling with investment plans in a region where sales in some countries have dropped more than 20 percent this year.þþ“Europe might not fully recover until 2016,” said Rebecca Lindland, an analyst with the research firm IHS Automotive. “Ford has to walk a fine line to keep the product fresh and hope demand returns at the same time.”þþLike other automakers, Ford is trying to stabilize its business in Europe. The company lost $404 million in Europe in the second quarter of this year, and has said its troubles there will cause its overall 2012 operating profits to fall from last year’s results.þþIts aggressive product strategy, which includes new passenger cars, S.U.V.’s and commercial vehicles, is intended both to reverse sagging sales and demonstrate its commitment to the region.þþ“Even with the near-term business environment, Europe represents a significant opportunity for profitable growth,” Mr. Mulally said.þþOver all, the company will have 15 of its global vehicles on sale in Europe within five years, and will also introduce its fuel-efficient EcoBoost engines to the market.þþFord executives, including its European chief, Stephen Odell, also showed new versions of some of its biggest sellers on the continent, including the Fiesta compact car, the Kuga sport utility, and Mondeo sedan.þþFord did not put a price tag on its investment in the new models, nor did it discuss any moves to reduce its manufacturing capacity or employment levels in Europe. The company is expected to unveil a restructuring plan later this year to possibly cut employment and costs in the region.þþThe product blitz underscores the increasingly competitive environment in the European industry. Volkswagen, which has the region’s biggest market share, is also ramping up its new products to gain share from weaker rivals such as G.M. and PSA Peugeot Citroën.þþMr. Jonas, the Morgan Stanley analyst, said it might be time for G.M. to simply call it quits and divest its European operations, just as the German automaker Daimler sold Chrysler in 2007.þþHe suggested it would cost G.M. between $7 billion and $13 billion to separate from Opel. But getting rid of it, he said, would increase the company’s depressed stock price and free up its leadership to improve the overall company.þþ“If the performance and repositioning of the ‘new G.M.’ continues to be harmed by Opel, we believe the damage could be lasting and difficult to repair,” Mr. Jonas wrote.þþAs for Ford’s European operations, “the underlying business in terms of product portfolio and brand positioning is sound,” he said in a separate e-mail.
Source: NY Times
