MarketLine Blog

Future of Ford in Europe and China seems uncertain after reported losses

Ford has reported a 50% decline on revenues since last year in China and Europe, facing with job cuts. Investors’ behavior had a big impact on Ford’s losses due to the company’s struggle to restructure their core business and persuade the investors that they are willing to do so, making them to lose their trust in the company. Ford aims a £14bn ($18.2bn) cuts focused outside of North America region, in order to revive flagging international businesses. Bridgend and Dagenham sites in UK will face significantly more dramatic cuts than already planned if the country leaves EU without a trading deal, rendering the company’s future in Europe uncertain.

China raised tariffs on imported vehicles from the US by 80%, making the Chinese market almost exclusive to Chinese manufacturers. Ford’s stock price has fallen by 32% since last year, driven by low sales in China due to trade war. Ford’s share price experienced high levels of volatility over a one year period. The share price was following the promises of drastic changes the company was making to investors, trying to influence their decision and buy back their shares.

Ford sales have been declined by 1.4% in Europe, due to lack of innovation in the company and support of the market with new models. Ford plans to partner with Volkswagen (VW) in order to launch new commercial vehicles in Europe, rendering the partnership crucial for their European future. Ford Motor claims high commodity prices had a big impact on their revenues; however commodity prices begun to decelerate starting in July 2018. Highly volatile currency prices affected negatively Ford’s revenue stream; however, the car maker company didn’t take the proper precautions to safeguard their investments from those kinds of events.

For further reading please visit: Ford Motor Company-Strategy, SWOT and Corporate Finance Report

 

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