Dusseldorf In the crisis, Ford Europe can rely on its profit maker: light commercial vehicles. Last year, Ford Europe achieved a market share of 15 percent with its commercial vehicle business. The US car group is the most important commercial vehicle supplier on the European market for the eighth year in a row, ahead of Stellantis and Volkswagen.
Hans Schep, European head of the commercial vehicle division, is therefore self-confident against the background of the savings measures in the group: “Our new record of eight consecutive years of European market leadership shows how much our commercial customers rely on Ford vans and pick-ups.”
Exact figures for the European commercial vehicle business are not immediately published by Ford. But in a roundabout way it can be seen how well the US car company earns with the classic Transit and the other commercial vehicle models in Europe. The yield is very high and is in the double-digit range.
Ford produces most of its European commercial vehicles in Turkey in a joint venture with Koc Industrial Holding called Ford Otosan. Ford and Koc each hold 41 percent of this joint venture, the rest is traded as free float on the stock exchange.
Ford Otosan is required to release key financial figures due to its listing on the stock exchange. Last year, the American-Turkish company produced around 370,000 commercial vehicles and a further 90,000 cars. That’s not much less than Ford’s entire European passenger car business, which counted around 520,000 vehicles last year.
Good money can be made with commercial vehicles. Ford Otosan has reported a profit of just over a billion US dollars for 2022. According to the company, the operating return is around eleven percent.
In accordance with the 41 percent share in the joint venture, almost half of the income went to Ford in the USA. By comparison, Ford Europe managed an operating return of just 0.2 percent last year.
Ford benefits from low wages
“Ford’s commercial vehicle business has been going well for years,” confirms Stefan Bratzel from the Center of Automotive Management (CAM) at Bergisch Gladbach University of Applied Sciences, “the group earns a lot of money from it.” The car manufacturer benefits in particular from a favorable cost structure in Turkey, above all the low wages. Ford Europe could correct the poor figures from the passenger car sector with the earnings from the commercial vehicle business.
Ford’s favorable production conditions in Turkey have now also aroused the desires of other car manufacturers – first and foremost Volkswagen. The VW group has agreed with Ford on joint production of commercial vehicles.
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As of next year, part of the Bulli production will probably be relocated from the traditional Volkswagen headquarters in Hanover to Ford Otosan in Turkey. VW and Ford models will use the same vehicle platform in the future.
The VW group wants to permanently secure its own competitiveness through the cooperation with Ford. In Hanover, the headquarters of Volkswagen’s commercial vehicle division, labor costs in particular are significantly higher than in Turkey. The Hanover factory is to focus more on the production of new electric models in the future.
Ford is also electrifying the vans
Ford also wants to produce more and more electrically powered vans and minibuses in the future. The US group has now launched the first electric variants of the Transit. Ford will gradually expand the number of its electric commercial vehicles in the coming years. In 2035, vans with combustion engines should no longer be produced or sold. That’s five years later than in the car business.
With the switch to new electric models and with the position as European market leader, the future of Ford’s commercial vehicle division is secured for a long time to come. The situation is completely different for passenger cars. “There is a risk that the Opel case will be repeated,” says university professor Stefan Bratzel. A good five years ago, the then parent company General Motors withdrew from Germany and sold its German subsidiary to the French PSA Group.
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Ford is selling fewer cars in Europe every year and is also drastically cutting the number of models produced in European factories. A few years ago there were 14 different Ford models, but in the future there will probably only be four. The US group is also gradually giving up its car factories in Europe. The car plant in Saarlouis, where a good 4,500 employees currently produce the Ford Focus, is to close in two years.
Ford is cutting in the development area
“A downward spiral can develop,” warns CAM Professor Bratzel. If Ford continues to reduce its range of cars, there is a risk of insignificance on the European car market for the foreseeable future. As quantities continue to fall, it becomes increasingly difficult to produce cost-effectively. The Ford group management in the USA attaches far too little importance to the European business.
According to the latest speculation, the next round of austerity measures will primarily affect European car development in Cologne, where several thousand jobs could be lost. The company has not yet officially commented on the rumours. Industry circles suspect that Ford will soon be announcing details of its new austerity program for the first time.
Last week, Ford CEO Jim Farley was critical of the situation in his own development department. “We need 25 percent more developers than our competitors,” said the Ford CEO in an interview. Ford cannot afford this deficit in terms of efficiency.
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