What’s Next for Ford?

Ford C-Max

The company’s share of the U.S. market fell from 16.8 percent in 2011 to 15.5 percent in 2012, echoing a similar market share loss at General Motors (NYSE:GM). However, this is less a failure of the American manufacturers and more a success of their Japanese competitors and a correction in the market. Toyota (NYSE:TM) and Honda (NYSE:HMC) both grew their market shares for the year, rebounding from a 2011 production slump that was the result of a devastating tsunami.

In 2011, with Japanese competitors struggling to rebuild, American manufacturers grew their share of the market to an artificially inflated level. Last year, some of that was corrected, and according to forecasts from both Ford and GM, their shares of the U.S. market may dwindle even further. These fears are fueled by a weakening yen, which could prove to be a competitive boon to Toyota and Honda.

Meanwhile, Ford Europe continues to weigh like an anchor on the rest of the company. Fourth-quarter revenue shrank 21.7 percent to $6.5 billion, while margins dipped 9.1 points to negative 11.4 percent. For the year, revenue shrank 21.3 percent, while margins fell 6.5 points to negative 6.6 percent. Ford Europe lost $1.7 billion for the year, in line with expectations.

“The decline in Ford Europe’s fourth quarter pre-tax results was more than explained by unfavorable volume and mix. The industry for the 19 markets Ford tracks in Europe was 13.5 million units, the lowest quarterly SAAR since 1995,” commented the company in its report.