As the economy continues to shift below our feet, automakers must think fast to make sure to direct its attention to the right place at the right time.
After strong gains in market share over Europe in the past couple of years, AutoNews reported that Ford Motor Company is revamping its internal five-year buiness plan in order to hedge away from the fast deteriorating European economy.
According to data, European debt and its consequent austerity measures have caused auto demand to plunge in a significant amount of Ford's regional markets. Unfortunately, this is only the latest problem to challenge automakers that have already been contending with over capacity, tight margins and aggressive price competition.
Given the current financial climate, Ford expects to lose up to $600 million in Europe this year.
In an interview with Reuters, Ford CFO Bob Shanks expressed, "We have to develop a better plan in response to what's going to be a much less favorable external environment. How do we tack to respond to new realities? That's what we're in the process of doing."
Each year, Ford prepares four internal updates on its business strategy where two of these updates involve extensive studies of Ford's business and five-year projections.
Naturally, Shanks kept the subjects of concern on Ford's future strategy a secret, but a more detailed press report from top executives is expected to be released by mid-July.
Prior to the crisis, Ford achieved deep cost reductions, staff cuts, plant closings, as well as a rapid introduction of new models to catapult its recovery in U.S. sales. So far, Ford delivered 12 consecutive profitable quarters through March, 2012 and earned $29.5 billion in the last three years after. Only earlier this week, Ford reported a rising demand in the U.S. Market that they've yet to find a way to satisfy.
Finally, we suspect an increase in presence in the Chinese market may be in the bag for Ford's new strategy. However, earlier today we reported that Chinese dealers are suffering from growing inventories and a drop in demand.
