Ford Motor Co. is denying a report by the British newspaper, The Times, that it plans to radically cut back its European line-up and shift focus to more profitable SUVs – echoing steps it plans to take in the U.S. market.
The Times reports that Ford would eliminate production of the Mondeo – the global name for what, in the U.S., is known as the Fusion – as well as its Galaxy and S-Max people-movers. The paper said Ford also wants to reduce the number of dealerships its products are sold through in Europe.
A cutback in passenger car models abroad would follow plans for the U.S. outlined by Ford CEO Jim Hackett earlier this year. Reflecting a dramatic market shift from sedans and coupes to SUVs, CUVs and pickups, Ford will eliminate virtually all of the passenger car models sold in the States, with the exception of the Mustang “pony car.”
(Why is Ford killing off the Focus Active crossover before it even goes on sale? Click Here to find out.)
Reshaping the European line-up would also fit into Ford’s efforts to stem mounting losses in Europe, according to industry analysts. The automaker went $73 million into the red there during the second quarter and, in July, CEO Hackett said Ford would spend around $11 billion to restructure its European operations, though he provided few details at the time.
Ford’s British operations, where a number of European models are produced, could take a hit because of the potential impact of Brexit, Britain set to finalize its departure from the European Union next spring.
But the impact of the restructuring could be felt across the continent. An advisory from Morgan Stanley estimated as much as 12% of Ford’s global workforce may be eliminated as part of broader cuts, with much of the layoffs to focus on Europe.
Ford is facing significant problems worldwide. Its sales and earnings have been sliding this year, along with its stock price which closed before the long Labor Day weekend at $9.48 a share, down from a 52-week high of $13.48. Some analysts are forecasting it could continue to dip to a six-year low.
Ford’s problems have resulted in a sharp downgrade of its debt, as well, Moody’s Investor Service last week dropping it from Baa2 to Baa3, one step above a junk rating.
(For more on the debt cut and other Ford financial problems, Click Here.)
Moody’s cited an “erosion in the company’s global business position and the challenges it will face implementing its Fitness Redesign program.”
As part of the program, Ford is eliminating from its U.S. showrooms models such as the Fusion sedan and compact Fiesta. It was planning to drop the Focus sedan in favor of a new crossover version, dubbed the Focus Active, but that model is also being killed off because of the trade war initiated by Pres. Donald Trump with China, where the Active is built.
Ford also is looking at potentially radical solutions to deal with its European problems, according to The Times which said it is even considering the possibility of pairing up those operations with a rival. Ford isn’t the only Detroit-based automaker struggling to address European problems. General Motors last year sold off its German-based Opel/Vauxhall subsidiary to France’s PSA Group, though it continues to sell a handful of Chevrolet and Cadillac markets in Europe.
For its part, Ford said it is not killing off the Galaxy, S-Max and Mondeo models, noting in a statement, “We have upgrades coming for Mondeo later this year, which will see new powertrains as well as exterior and interior updates as well as enhancements to the Mondeo Hybrid range.”
Ford did not, however, address questions related to European job cuts and other possible moves to rein in losses on the Continent.
(Ford charges ahead with new autonomous vehicle unit. Click Here for the story.)