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Q&A: Ford aims to recover market share in Germany

Cologne. After two years of heavy losses, Ford plants in Cologne are finally expected to return profits in 2004. Ford's chief plant manager Bernhard Mattes discusses the state of the German car market, discount battles and his targets for this year.

How do you judge the development of the German car market -- still calm or increasingly nervous?

I remain optimistic about the market moving up again. All indicators are pointing that way.

Can you feel it in terms of incoming orders?

Compared to the last quarter of 2004, we have recorded a significantly higher number of orders. We have been able to build up the number of orders on hand for the first quarter, even though figures are still not satisfactory. We have busy traffic at our showrooms, but still not enough sales going through.

Is this going to change in the second quarter?

I should very much hope so. The new Focus C-Max, which is now fully available, is expected to deliver a new impulse. The months of March, April and May will be setting the pace for the whole year - for us as much as for the whole German auto industry.

Currently, the market is strongly driven by incentives. How do you react to that?

We already set out a clear strategy at the end of last year. It is based on a good price-performance ratio, which we are already offering today.

And you will keep improving on that?

With our Viva special models we can offer an attractive proposition in all model ranges. This is why the Focus is selling exceptionally well. Our figures are well within our targets.

But Fiesta sales have been in sharp decline.

With regards to small vehicles, the lack of consumer confidence is hitting especially hard. We can feel this with the Fusion, and that's why we will intensify customer information even more and boost our marketing efforts.

Aren't you planning any further adjustments to sales prices?

No. We want to remain predictable to our customers. We have good purchase and finance deals, and this is working well both for us and the dealers.

How is the new Focus going to be priced this fall?

We are still taking our time with this. At the moment we have a good opportunity to watch the market and the competition, so we will be able to price according to the market in the fall.

Can pricing alone persuade the customers to buy?

Prices as such can only provide an impulse. The relationship between price and performance is more important.

What are your targets for this year?

To grow to a market share of about eight percent. But the main thing is that we grow and make up for the loss in market share that we saw at the end of last year. And it should be profitable growth, because we want to make a strong contribution to improving the results of Ford Europe.

By which scale?

Altogether we are aiming to improve our profits by about $1 billion, including $450 million in restructuring measure taken last year. I can very well see further potential for cost reduction in our products, processes and structures.

Last year's early retirement program did not achieve the success that was hoped for. What will happen next?

We have set up work groups who are looking at possibilities for optimization. At this time, we are engaged in talks with employee's representatives. We are going to announce the results in the near future.

Are you ruling out company-related job cuts?

In the process of collective bargaining the works council was given guarantee that there are going to be no business-related job cuts in 2004 and 2005. In return, staff will have to do without a pay increase and certain payments in excess of the collectively agreed salary.

Can you cut distribution costs?

We need our network of 700 businesses with 1,000 establishments and 1,000 authorized garages on top of that in order to be able to make a nationwide offer. Also there is still potential here, what with all the things that are happening behind the curtain, but also at the intersection between the manufacturer and the dealers. There is still a lot of room to move on: We need a strong distribution, which is able to keep on investing.

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