February 28, 2011 / 7:25 PM / 8 years ago

Ford CFO wants fewer incentives in Europe

GENEVA (Reuters) - Ford Motor Co’s (F.N) financial chief wants automakers in the European market to adopt “rational” behavior and put an end to incentive rates he sees as excessive.

An employee works at the assembly line of the Ford car factory of Saarlouis, Germany, December 6, 2010. REUTERS/Vincent Kessler

“We’d like to see a more rational marketplace,” Chief Financial Officer Lewis Booth told reporters. “People are incentivizing cars so heavily it’s not a long-term rational strategy. We’d like to see the European market stabilize.”

Booth spoke at an event to unveil a new compact hatchback for the European market called the B-Max. The new vehicle, built on a car platform the size of the Ford Fiesta, will launch in Europe next year.

Neither he nor the chief executive of Ford Europe, Stephen Odell, changed the automaker’s 2011 European profit forecast.

Odell and Booth reiterated that the company will post profits in each of its regions this year: Europe, Asia and the Americas. While Ford made a $200 million profit in Europe last year, it lost money in the fourth quarter.

Odell said that Ford’s utilization of its European capacity is in the “mid-80s” percent. He said that he did not expect the auto industry in Europe to alter its overall capacity utilization in 2011 despite the failure of European automakers to cut plants during the 2008-2009 downturn when sales were at their lowest level in decades.

Booth said that Ford faces stiff competition in a crowded European market. He said the task is more challenging because the automaker will not “chase market share” as some competitors have done, using high incentives to spur auto sales.

Booth said an extended period of high oil prices may cause Europeans to change to more fuel-efficient cars.

Odell said it is difficult to gauge the fuel price at which consumers would change their driving habits, due to the fragmentation of the European market.

Booth said his main concern regarding high oil prices was that if prices remain high for a long enough period, “They may affect the economic recovery of Europe.”

Odell said he expects European auto sales in 2011 to be in a range of 14.5 million and 15.5 million vehicles.

Ford’s share of the European market in 2010 was about 8.3 percent, less than half its share in its home U.S. market, but near the level the company has kept in Europe for about a decade.

In 2010, Ford sold 1.28 million new vehicles in its primary 19 European markets, down 11 percent from 2009.

Ford points to its performance in fast-growing markets in Eastern Europe and Russia and Turkey. In those three areas, sales rose 37 percent last year.

The B-Max unveiled on Monday night is a “production concept,” meaning that the vehicle will be produced but the production model will change a bit from the one shown by Ford in Geneva. The B-Max is smaller than its C-Max, which is built on a Ford Focus platform.

Ford shares were down 1 percent at $14.93 on Monday afternoon, lagging the broad Standard & Poor’s 500 Index which was up 0.2 percent.

Reporting by Bernie Woodall, editing by Matthew Lewis

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