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Ford Needs To Focus On SUVs To Succeed In Europe

Industry News / 4 Comments

Even in the land of hatchbacks, SUVs are a necessary evil.

Ford made it clear how important SUVs are to the US market when it announced that all non-SUV models (excluding the Mustang and Focus Active) would be killed off. The US market is clearly SUV-obsessed, but Europe still buys plenty of sedans and hatchbacks. Now, a big question has arisen: will Ford make the same decision to focus on SUVs in Europe? Automotive News reports that Ford will have to give SUVs a higher priority if it wants to be profitable in Europe.

Ford CEO Jim Hackett made this fact perfectly clear: "We're extremely dissatisfied with our performance in Europe." Thanks to a combination of Brexit and a consumer switch to crossovers, Ford's European division quickly fell from $88 million in profit last year to a $73 million loss in the second half of 2018. Ford actually has several models that are losing money in Europe. "The low-performing part of our portfolio represents a majority of our volume, revenue, and capital deployed in the region," CFO Bob Shanks said. These low-performing cars consisted "principally of cars and multi-activity vehicles (minivans) such as C-Max."

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Shanks did mention that some vehicles are selling profitably, including the Transit van, Kuga crossover, Ranger pickup and "selected imports" (most likely referring to the Mustang and Edge). These vehicles represented over 200% of Ford's profits in Europe while accounting for less than 50% of sales. Ford clearly needs to refocus its strategy in Europe, and will now concentrate on crossovers and vans. It doesn't seem like the company will go so far as to cancel all non-SUVs, but Europe may soon suffer the same fate as the US when it comes to the dominance of crossovers.

So what does this mean for Ford's European lineup? The C-Max could be the first model on the chopping block, followed by the Mondeo (known as the Fusion in the US). Ford already discontinued the C-Max in the US and the Fusion won't be far behind (unless it comes back as a high-riding wagon). The S-Max and Galaxy minivans may also be discontinued to focus on crossovers. Sorry Europe, but at least you still get the new Fiesta ST.