Ford Europe Revamps Model Range and Streamlines Operations to Optimize Costs

Ford’s subsidiary in Europe recently emerged from several straight years of losses when it made a profit of USD 259 million in 2015 , Now, in a bid to further cut costs and increase profits, the company will be streamlining operations on a large scale and revamping its range of models in Europe.

According to a press release from the company, Ford will be intensifying its focus on high growth segments like SUVs and crossovers with new vehicles and derivatives while eliminating less profitable models from its model lineup. This could possibly means that some of the slowest moving models including passenger vehicles like the Ka city car, Galaxy, S-Max and B-Max will no longer be sold in Europe. New models like the Kuga crossover and possibly the Edge are likely to be introduced in the European market in order to take advantage of the booming market for crossovers, with plans on track to debut five new CUVs in the coming three years.

Another segment the company will pay more attention is its luxury models, in view of the high profit margin for these vehicles. It has plans to sell five new Vignaale models in addition to the Mondeo Vignale. In view of the current preferences of customers, Ford will also pay close attention to electrified models including plug-in hybrids, hybrids and EVs, performance cars like the Mustang and Focus RS and commercial vehicles like the Transit Custom and Ranger.

One more step Ford is taking in order to optimize costs is downsizing the workforce. The company ahs already closed three manufacturing plaants in Europe from 2013 and launched a “voluntary separation program” in order to rightsize the workforce, especially in Germany and UK. This is expected to cut costs by USD $200 million every year and increase the operating margin of the company from 6 percent to 8. The increase in profits will be used to invest more in the Ford Smart Mobility initiatives and new technologies that are likely to make the business more sustainable and profitable in the long run.

Commenting on the changes Jim Farley, Ford executive vice president, Europe, Middle East and Africa said, “We are creating a far more lean and efficient business that can deliver healthy returns and earn future investment. Our job is to make our vehicles as efficiently as possible, spending every dollar in a way that serves customers’ needs and desires, and creating a truly sustainable, customer-focused business.”

With this change in strategy, Ford is aiming to become even more competitive in Europe and emerge as a winner, even while pitted against premium brands backed by an exciting model lineup, innovative marketing strategies and best-in-class dealer and customer experience. The company has plans to set up 500 new, state-of-the-art flagship FordStores in all major urban areas in Europe in order to cater better to customer needs. Two notable innovations are FordPass and FordHubs. FordPass is a platform which will provide members with a personal mobility assistant to streamline travel arrangements, to reserve and pay for parking in advance, to earn loyalty points, to schedule service appointment and avail many other services. FordPass will be launched in Europe later this year. FordHubs will be center where consumers will have a chance to discover Ford’s latest innovations, learn about the advances made in mobility services, and experience exclusive events. The first FordHub in Europe is slated to open in London later this year.

“We are investing in Ford Smart Mobility, which will deepen our customer relationships and reduce our conquest marketing costs,” said Roelant de Waard, vice president, Marketing, Sales and Service, Ford of Europe. “There is a huge opportunity in Europe to give our customers what they want, sometimes before they even know it, by anticipating their needs through data and data analytics.”