Ford CEO says no plans for alliances in Europe

GENEVA Mon Mar 5, 2012 7:11pm EST

GENEVA (Reuters) - Ford Motor Co (F.N) has decided not to pursue any alliances this year with other carmakers in Europe, where it may lose up to $600 million, even as rival General Motors Co (GM.N) joins forces with France's Peugeot in hopes of riding out the region's debt crisis and depressed auto market.

Instead of forming alliances, Ford will continue "to match production with real demand" in Europe, a strategy that has helped the automaker stay profitable in other regions, CEO Alan Mulally told Reuters on Monday.

Mulally, who spoke before the start of the Geneva Auto Show, said the company continually looks "for areas where we might share technology, where we have common interests."

GM last week announced a pact to share purchasing and vehicle development costs with PSA Peugeot Citroen (PEUP.PA)

"We have no plans for any other alliances," Mulally said, when asked about possible tie-ups with European carmakers.

Ford overall lost $190 million in the fourth quarter of 2011. For all of last year, it lost $27 million in Europe.

Last week, Chief Financial Officer Lewis Booth said Ford could lose between $500 million and $600 million in Europe this year if overall auto sales in the region come in at 14 million vehicles - which would be an 8.5 percent decline from 2011.

Still, Booth, who is retiring on April 1, said Ford is not likely to enter into platform-sharing and vehicle-development alliances because of the "One Ford" ethos that has been pushed by Mulally since be became CEO in 2006.

"One Ford" is the automaker's strategy to unify its once-disconnected business units and take advantage of its scale to drive down costs and build a global brand.

"The only alliance that Ford is working on is making One Ford work," Booth said at the Ford Geneva event. But he agreed with Mulally that Ford will continue to look at possible alliances regarding technology in its vehicles.

BREAK-EVEN IN EUROPE

GM hopes its own alliance will shore up its money-losing European unit, Opel. As part of the deal, GM will take a 7 percent stake in Peugeot, the second-largest European automaker.

Each company said it will not cut jobs or close plants in Europe, which has left many analysts skeptical of how the deal can save GM money.

Ford, the No. 2 U.S. automaker, has its own alliance with Peugeot, which is to make diesel engines. Unlike in its home U.S. market, diesel engines dominate in Europe.

"We also treasure our relationship with PSA," said Mulally, using the shorthand for Peugeot. "It's been mutually beneficial for both of us."

Ford sells vehicles in 19 markets in Western Europe. Last year, Ford's European sales were 1.26 million vehicles, roughly flat with 2010 levels. In those 19 countries, the industry sold 15.28 million vehicles, Ford said.

Mulally said Ford's European unit "is really in a different place than some of our competitors" because the automaker has been aligning production with demand for several years.

Booth said that Ford has a "relatively high break-even" point in Europe of between 15 million vehicles and last year's Western European total sales of 15.3 million.

Ford executives would not predict the automaker's financial performance in Europe beyond 2012. In 2011, Ford's market share was 8.3 percent in its key Western European markets, about flat with 2010.

(Reporting By Bernie Woodall; Editing by Tim Dobbyn and Matthew Lewis)

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