Affected by declining unit sales and rising raw material costs, Ford of Europe had reported its first quarterly loss since early 2009. Last Tuesday, Ford Motor Co. said that its European unit had a pre-tax operating loss of $196 million, compared with a profit of $131 million the previous year. Ford of Europe posted third-quarter revenues of $6.2 billion, compared to $7.3 billion a year ago.
Ford attributed the drop to the overall sales slowdown in Europe, higher commodity costs and the fact that money is needed for the launch of new products such as the Focus compact, Focus-based C-Max minivan and a refreshed Mondeo mid-sized car.
Industry association ACEA said that European car registrations decreased by 9.2% to 1.26 million vehicles in September compared to 1.39 million a year ago. ACEA also said that nine-month sales fell by 3.7% to 10.6 million.
Ford's sales decreased by 20% to 108,700 units in September and the first nine months had ended with a 10% drop to 876,475 cars. The last quarterly loss that Ford of Europe had incurred was in the first quarter of 2009 with a $585 million decline.
According to a Ford of Europe spokesman, Europe's third-quarter sales were similar to the results posted at the beginning of the global economic downturn in late 2008 and early 2009. Ford Motor asserted that its overall automotive structural costs were $700 million higher than a year earlier, and commodity costs were also $750 million higher.
Ford predicts its full-year structural and commodity costs each to be about $1 billion higher compared to the previous year. The carmaker said that the higher structural costs are required to support Ford's product campaign. Ford didn’t reveal how much of the added costs would come from Europe. [via autonews - sub. required]