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Ford to transform European operations

In doubt: Ford's Ka micro-hatch is reportedly on the chopping block as the car-maker looks to cut under-performing models.

New SUVs are expected, some models face the axe as Ford rolls out European strategy

4 Feb 2016

FORD of Europe has announced that it will kill off under-performing models and introduce a rash of new ones as part of its “transformation plan” targeting improved profits from this year.

Part of the plan is to introduce five new SUVs on the continent in the next three years. These will include updated versions of the Kuga mid-sizer and EcoSport crossover, as well as the new Edge large SUV.

So far there has been no official confirmation of what the other two models are, but Autocar is reporting that they could be a pair of crossovers based on the Fiesta and Focus.

Given the Kuga is based on Focus and the EcoSport shares its underpinnings with the Fiesta, it could mean that Ford is heading down the path of offering SUV variants, possibly in the form of lower-slung, coupe-like offerings, much like Mazda is expected to do with the launch of a production version of the swoopy Koeru concept.

It is unclear if the European product roll-out will have any impact on the Australian market and whether the two new SUVs will be made available Down Under, or if they will remain European-only models.

Ford Australia announced in late 2014 that it would release 20 new-generation or refreshed models by 2020. Some of those models have already launched, including the Mustang, refreshed Ranger pick-up and related Everest SUV, facelifted Focus and all-new Mondeo.

If more SUVs are launched in Australia, they will join the EcoSport, Kuga, Everest and the Territory replacement – likely to be the Canadian-built Edge.

In terms of the European strategy, Ford will launch seven new and refreshed models this year, including the Focus RS, and it will streamline its core model line-up by ditching less-profitable offerings over time.

Ford did not detail the models that could be facing the axe, but Autocar is reporting that it could include the Ka micro car that is expected to end production this year.

The car-maker is hoping to lift its SUV sales by 30 per cent this year compared with 2015 on the back of the new or refreshed models and it wants to hit 40,000 sales for its performance models that includes the Mustang, Focus RS and ST and Fiesta ST.

It will also expand its premium Vignale line, beyond the upscale version of the Mondeo, to at least five models by 2017.

New hybrid, plug-in hybrid and full electric vehicle models will be rolled out by 2020 in Europe, and more all-wheel-drive and four-wheel-drive models will also hit showrooms in the coming years.

In relation to its bottom line, Ford of Europe returned to profit last year and is targeting higher profit and pre-tax operating margin in 2016 as well as a six-to-eight per cent long-term operating margin.

Ford said the closure of three manufacturing plants in Western Europe since 2013 and reaching a cost-saving agreement with German labour unions has helped, and that the company will introduce new measures to further reduce costs.

A voluntary redundancy program to reduce administrative and selling costs is expected to save Ford of Europe about $200 million a year, while manufacturing improvements should also have an impact.

Ford plans to improve its brand image through new products, increased “experiential marketing”, best-in-class dealer and customer experience and the roll out of 500 new FordStores in major urban centres.

More revenue streams will be looked at through customer loyalty, as well as transport, fleet and ride-sharing services.

Ford executive vice-president of Europe, Middle East and Africa Jim Farley said the aim of the transformation plan was to ensure profitably regardless of the economic conditions.

“In the past three years, Ford of Europe has improved its business in all areas and moved from deep losses to a $259 million profit in 2015. This is a good first step,” he said. “We are absolutely committed to accelerating our transformation, taking the necessary actions to create a vibrant business that’s solidly profitable in both good times and down cycles.”

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