Ford's problems in Europe have been well documented. Lack of product, overcapacity and poor brand image have all hit Ford of Europe in recent years.
But Ford Motor Co. is fighting back, says CEO Jac Nasser, with mainstream cars like the new Mondeo, and with increased focus on its Jaguar, Land Rover and Volvo premium brands.
Nasser was interviewed October 25 at Ford Motor Co.'s headquarters in Dearborn, Michigan, USA, by Automotive News Europe Executive Editor Peter Brown, together with Edward Lapham and Mary Connelly of US sister publication Automotive News.
In Europe, do you share the commonly-held view that you just got behind on the product plan and your products became uncompetitive?
I agree with that. But I don't share the view that that is the only problem. I wish it were. I think there are three things that have not helped us in Europe.
The first is that as an industry we were overly optimistic about utilization of capacity in Europe. People held off on really facing the actual situation. That phase [i.e.: starting to correct capacity utilization problems] Nick Scheele and his group initiated over the last 12 months.
Second, we got a tremendous advantage with Ford 2000. Most of it was reflected in the North American market. I am talking about people, focus, investment. I think it has paid off for us pretty well. But it hurt Europe.
What would be an example of where that paid off for you in North America?
Look at our market share. Look at our profitability here in the United States. We were able to pick the market better in the United States and have products leading segments. We didn't in Europe. But Focus has been a big success for us. It is the top-selling car in the world.
We have just launched the Transit and I think that will be a big positive. Mondeo is getting great reviews. It is a brilliant car. And we deliberately prioritized the small car Fiesta/Ka replacement for the back end of next year.
We also have a Galaxy doing really well and we will have Escape there as well. The product piece is happening. It may be slower than we expected. We had a product vacuum for a while.
The third thing that is happening in Europe is that what I would call the middle brands, the Fords, the Vauxhalls, the Opels and the Fiats, are being squeezed from the bottom by the Korean brands and from the top by the traditionally more premium brands. We anticipated that. That is why we didn't do another Scorpio and Granada. That is one of the reasons we started to expand Jaguar and purchase Volvo Car and Land Rover.
The third part of the building block for Europe is getting a better balance between the Ford oval products and the Premier Automotive Group.
Do you mean relatively more vehicles from the Premier Automotive Group?
Yes. I don't see a decline in volume for the Ford oval. But I see great volume potential, particularly for Jaguar, Volvo.
At the near-high end?
Yes. The new Jaguar is a good example of that and we will see more examples as we go forward.
They are the three building blocks we need to work on in Europe. It won't be easy. It will be really tough. Results are still tough. We will do better next year and we will do better the year after that.
Will you make money next year?
We think so. It is always difficult to tell. We think the economy is clearly struggling overall although sales seem better than the overall economy. Germany is struggling as a market. We don't see any big change for next year.
Are you going to start making substantial numbers of Mazdas in Europe?
If Mazda wants to be significant in Europe you are going to have to put some more Mazdas in your plants. When you look at the European market and the currency swings and what competitive Japanese brands are doing in Europe it is inevitable that Mazda is more represented in terms of manufacturing capability in Europe. It is a question of how much and with what product. Those questions are being addressed now.
Are you close to decisions?
Probably months away. To me it is a very clear question. Do you want Mazda to grow in Europe or are you satisfied with the status quo? If you want Mazda to grow in Europe then it is inevitable that you have a greater European presence.
There don't need to be [separate] Mazda factories?
No, I don't think so.
Is there any other place in the world where you are re-evaluating your portfolio of brands?
I would say everywhere. Jaguar is growing into segments it hasn't been in traditionally - and Volvo Car and Land Rover are recent acquisitions and there is potential for those brands. One of the reasons we bought them is we thought they were great brands with even further potential.
Asia is a good example. The traditional approach in Asia would be to find some partners, invest a lot of money and hope for the best - there are a lot of people there, and one of these days they are going to buy a lot of cars.
Our view is that Asia is important. We have got some manufacturing capability there. We have got a great partner in Japan with Mazda. We would like to do more in China. There is a great middle class in the Asian market. There is a tremendous level of global communication now so people everywhere know about every product, every brand. The Asian middle class is extremely brand conscious and brand aware. Why not develop the Premier Automotive Group brands, for example Volvo, in the Asian markets?