DETROIT -- Ford Motor Co. is braced for tough market conditions in Europe again this year as stagnant demand and higher prices for materials put the squeeze on carmakers, the head of its European division said on Tuesday.
"The environment is going to be at least as challenging in 2005 as in 2004," Ford of Europe Chairman Lewis Booth told reporters at the North American International Auto Show.
Booth said Ford was forecasting flat industry sales despite an upturn late last year in many big markets.
"We still see no real retail demand in Germany and until we see signs of retail customers coming into showrooms in Germany the European industry is going to stay challenged," he said.
The British market also cooled off late last year as higher interest rates made consumers more wary about spending.
Heavy incentives still contributed to strong December showings in both those markets, Booth said.
Booth would not comment on whether Ford had hit its target of narrowing its 2004 loss in Europe to $100 million to $200 million from $1.1 billion in 2003, a goal that company officials had said after third-quarter results that it was set to meet or beat.
Booth said Ford did not plan to cut any more jobs in Europe after having reorganized capacity to be more in line with demand. It now operates close to full capacity.
The focus will instead be on generating efficiencies, he added, noting Ford had been able to work with staff in Germany to reduce benefits.
Still, the strong euro was helping Asian manufacturers boost their presence in Europe at the same time raw materials prices had risen, Booth said.
"In 2005 the continued pressure on cost is going to be on material costs," he said, adding Ford was looking to purchase more components from low-cost countries in Eastern Europe, India and China as supplier markets there developed.