Ford's European sales numbers for February are in, and once again it's an ugly result: The Blue Oval's overall sales in the 19 markets it counts as "Europe" were down 19% over year-ago totals for the month.

That doesn't compare well with the overall industry's 11.4% year-over-year decline. Ford - for many years, Europe's second-largest automaker -- appears to be losing market-share ground in one of its most important regional markets.

But if you look very closely, there are some early hints that Ford's European turnaround plans might be getting on track.


A silver lining* amid grim numbers?
It's the nature of PR folks to look for the most positive way to frame tough news, and Ford's PR crew is no exception. So it's no surprise that Monday's press release featured this carefully parsed bit of optimism: "Ford passenger car retail market share in key European markets* rose 0.6 percentage points, to 7.2%."

You know it's getting tough for Ford in Europe when the only good news they've got comes with an asterisk.

In this case, though, the asterisk links to a note saying that "key European markets" include the U.K., Germany, France, Italy, and Spain. Those four countries together represent about 80% of Ford's total sales volume in its 19 European markets.

Ford did have some less carefully parsed high points to, er, point out. The all-new Kuga SUV (a twin of the U.S. market's Ford Escape) and just-updated Fiesta subcompact are both doing well, with orders up 27% and 18%, respectively, over year-ago numbers.

Ford of Europe vice president Roelant de Waard said in a statement that the company is reducing sales to daily rental fleets and other low-margin business, instead choosing to focus on increasing retail sales and market share. That's the right long-term strategy, preserving Ford's per-sale margins and pricing power, but it will make the Blue Oval's sales numbers look ugly for a while when compared to some of its rivals.

Settling a labor dispute that cost Ford some sales
Ford also announced, late last week, that it had come to an agreement with workers who had been staging protests at its factory in Genk, Belgium, and at some of the factory's suppliers. Workers have been concerned about Ford's decision to close the Genk plant after 2014, part of a comprehensive turnaround plan aimed at returning Ford's money-losing European operation to profitability by mid-decade.

The Genk factory builds the Mondeo mid-sized sedan as well as the S-MAX and Galaxy minivans. Production had been essentially halted since the closure was announced in October of last year. Supplies of all three had run short over the last couple of months, a factor that has weighed on Ford's recent European sales results, de Waard said.

The company confirmed on Monday that Genk's production lines have been restarted, and de Waard said that Ford will now "move quickly" to meet "strong demand". Ford's February sales of each of the three models were roughly half of year-ago totals, so there's some reason to expect that the agreement to restart production will incrementally improve Ford's retail sales results in coming months.

Ford's newfound labor peace came at a price: severance packages that could amount to as much as 2.5 years' worth of pay for laid-off workers once the plant closes. But it seems like a relatively small price to pay, compared to the challenges that rival General Motors has faced in negotiations with its European labor unions.

The upshot: ugly results, but small signs of a coming turnaround
There's no getting around it: Auto sales in Europe generally, and Ford's sales in particular, are going to be ugly for some time to come. Ford lost $1.75 billion in Europe last year, and expects to lose about that much again in 2013.

But if you look really closely, you can see small signs of progress. Strong order totals for the newest models bode well for Ford's plans to continue to expand its European lineup. The Genk factory is now on track to close at the end of next year, with (hopefully) labor peace and continued steady production between now and then - and renewed production of the three vehicles produced at Genk should help Ford's sales totals in coming months.

And yes, Ford's share of the retail car markets in Europe's biggest national markets did appear to tick up a bit in February.

Ford has been performing incredibly well as a company over the past few years -- it's making good vehicles, is consistently profitable, recently reinstated its dividend, and has done a remarkable job paying down its debt. The stock has recently taken off, and it appears investors have started to notice what Ford is doing right. Does this create an incredible buying opportunity, or are there hidden risks with the stock that investors need to know about? To answer that, one of our top equity analysts has compiled a premium research report with in-depth analysis on whether Ford is a buy right now, and why. Simply click here to get instant access to this premium report.

The article Is Ford Getting on Track in Europe? originally appeared on Fool.com.

Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear . The Motley Fool recommends Ford and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Understanding Stock Market Indexes

What does it mean when people say "the market is up 2%"?

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Add a Comment

*0 / 3000 Character Maximum