Ford profits drive centres on Asia

Financial Times
June 8, 2011

Ford Motor, the largest US car manufacturer by market capitalisation, plans to push its profit margins sharply higher over the next few years as it raises global sales, the company said on Tuesday.

It set out the plan along with a target of raising its worldwide sales by about 50 per cent to 8m vehicles by the middle of the decade, with much of the growth coming from Asia, traditionally Ford’s weakest region.

Like other car companies, Ford is being hit by the shift to smaller vehicles for which margins are generally lower.

That trend is set to continue in the coming decade, with small cars set to rise from 48 per cent of Ford’s sales by volume in 2010 to 55 per cent by 2020.

However, the company believes it can offset that effect by cost reductions, enhancing its brand and selling more highly equipped vehicles.

It expects the net effect will be that its global operating margin will rise from 6.1 per cent in 2010 to 8-9 per cent “by the middle of the decade”.

Lewis Booth, Ford’s chief financial officer, told the Financial Times that the company was planning for growth after emerging from the crisis in the US motor industry, which was something it had failed to do after previous downturns.

Unlike GM, the largest US manufacturer by sales, and Chrysler, Ford was not bailed out by the US government.
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