Can Europe Become the Growth Engine for Ford in 2017?



Ford’s 4Q16 revenues

In the previous part, we looked at Ford Motor Company’s (F) revenues from North America. The company’s revenues from its largest region deteriorated in 4Q16 due to lower sales volume and dealer stock reductions.

Now, let’s find out how Ford’s revenues shaped up in Europe and discover whether it can become an engine of growth for the company going forward.

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Flat performance in Europe

In terms of revenues, Europe is the second-largest market for Ford after North America. In 4Q16, Ford’s revenues from Europe fell 2% to $7.2 billion from $7.3 billion in 4Q15.

In 3Q16, Ford’s revenues from Europe dropped 10% to $6.3 billion from $7.0 billion in 3Q15. On a quarter-over-quarter basis, the company’s performance has improved significantly in the region.

Can Europe become a growth engine?

Ford (F) expects to deliver continued strong profitability from Europe in 2017. The company warned investors that its 2017 Europe profitability could be lower than in 2016, primarily due to the strengthening US dollar against the British pound. This currency shift is the reason that we shouldn’t necessarily expect Europe to become Ford’s growth engine in the near term.

A rising US dollar is hurting the profitability of US automakers (IYK) such as General Motors (GM) and Ford. In contrast, European and Japanese automakers such as Fiat Chrysler (FCAU) and Toyota (TM) are likely to benefit from a stronger dollar and their weak home market currencies.

Continue to the next part to look at Ford’s 4Q16 performance in its other key markets.


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