Can Ford's Europe Strategy Finally Turn Losses Into Stability?

Core Insights - Ford's European business has faced significant challenges, including a 17% decline in sales in 2024 due to weak passenger vehicle demand, slow EV adoption, and increased competition from low-cost Chinese automakers [1][10] - The company is undergoing a restructuring process that includes job cuts and plant closures to reduce costs and focus on core areas, despite running at a loss in Europe [2][10] - Unlike General Motors, Ford is committed to remaining in the European market, believing it holds strategic and financial importance if properly reshaped [3] Restructuring Strategy - Ford's restructuring plan is based on three pillars: strengthening Ford Pro (the commercial vehicle division), refreshing the passenger vehicle lineup with multi-energy models, and optimizing the industrial footprint for cost efficiency [4][10] - The Ford Pro division has expanded beyond traditional vehicle sales to include a comprehensive ecosystem of software and services, significantly increasing vehicle uptime for customers [5] Product Development and Manufacturing - Ford plans to introduce affordable, multi-energy passenger cars and commercial vehicles by 2028 to enhance competitiveness in the market [6] - The company is reshaping its manufacturing footprint, with significant investments in electric drive units and advanced engine technology at various plants in the U.K. and Spain [7] Partnerships and Collaborations - Ford is leveraging partnerships to enhance its strategy, including a collaboration with Renault to develop low-cost EVs and co-produce commercial vans [8] - Previous alliances, such as those with Koç Holding and Volkswagen, have also contributed to the value of Ford's commercial vehicle offerings and EV production [9] Financial Performance - The restructuring efforts have led to a notable improvement in financial performance, with Ford's European loss narrowing to $52 million in Q3 2025 from approximately $440 million a year earlier [11][12] - Despite ongoing challenges, the strategy is becoming clearer and more disciplined, with potential for Europe to become a more stable contributor to Ford's overall business in the future [12] Market Position - Ford's shares have increased by 33% over the past year, outperforming the industry, and the company trades at a forward price-to-sales ratio of 0.32, indicating a favorable valuation [13][14]