LONDON -- Concern about European government spending cuts hurt car demand in the second quarter, adding to uncertainty over the recovery of the region's auto market, said Stephen Odell, the head of Ford Motor Co.'s European operations.
"The second quarter's been a bit more difficult as we start to see austerity measures kicking in and concerns about sovereign debt," Odell said in an interview in London. "It's pretty difficult to predict where the industry is going to go."
Ford projects that industry-wide sales in the region will range between 14.5 million and 15.5 million vehicles this year.
Sales in 2010 totaled 13.8 million, according to data from the European Automobile Manufacturers' Association.
Ford expects to offset the industry weakness in part with new products and should benefit from "full availability" of the C-Max minivan and Focus compact, Odell said in the interview at a conference organized by Britain's Society of Motor Manufacturers and Traders.
Ford plans to beef up its factories in the U.K., investing 1.5 billion pounds ($2.4 billion) over the next five years, Odell said at the event. More than half of the funds will come from the carmaker, with European Union grants and a 340 million- pound guarantee from the U.K. making up the balance.
Ford also plans to create "several hundred" jobs in Europe this year.
Ford's market share in Europe through May slipped to 8 percent from 8.6 percent, dropping it below General Motors Co., which garnered 8.6 percent of car sales in the region, according to data from the regional trade group.
In a recent report, Standard & Poor's said the potential for profitability improvement at Ford and GM lies "primarily in Europe."