GM and Ford still unsure in Europe despite lower region losses

Article by Anita Panait, on August 2, 2013

Both General Motors and Ford Motor Co. posted smaller losses in Europe in the second quarter of 2013, which may signal the vehicle market has already reached it rock bottom and has started to recover. However, GM and Ford believe otherwise. The US carmakers believe that the lower losses in the second quarter of 2013 were just because they were able to successfully isolate the problem in Europe, partly thanks to a resurging market in the United States.

They are not bound to believe that the European vehicle market is on its way to recovery from the weak demand, which so far has caused them to bleed almost $2 billion each. The US carmakers managed to contain the damage of the weak European by borrowing some strategies they implement to get on their feet from the US recession a couple of years ago.

These strategies include aligning supply with demand and reducing output capacity where possible. The US carmaker has also been emphasizing retail over fleet customers and focusing on improved products and brand positioning.

GM chief executive Dan Akerson remarked while discussing the carmaker’s second-quarter results for Europe that “a demand-driven recovery isn't in sight yet" for the region, adding that the carmaker has to “keep working on cost, complexity and brand building."

GM just posted $110 million in losses in Europe in the second quarter of 2013, much lower than expectations, boosted by cost containment and strong demand for the new Opel/Vauxhall Mokka crossover.

The carmaker logged $394 million in losses in 2012 in Europe in the same quarter. For the first half of 2013, GM just posted $285 million in losses in Europe – on pace to a much lower deficit for the full year. On the other hand, Ford posted lower losses in Europe in the second quarter of 2013 to $348 million, compared to $404 million in the same period in 2012.

Ford also revised its expected losses in the region from $2 billion to $1.8 billion. Ford’s restructuring plan in Europe is patterned after the strategy that allowed the carmaker to return to profitability in North America: shutting down three sites, cutting 6,200 jobs; and launching vehicles based on global platforms.

Topics: gm, ford, europe, sales

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