Ford: Europe’s Car Price War Likely to Continue

Ford Motor Co. doesn't expect the European auto market's fierce pricing competition to end soon despite the apparent stabilization of vehicle sales.

Roelant de Waard, Ford of Europe sales chief, tells Reuters that price relief will come only when registrations rebound significantly. He predicts that the annualized sales rate will hover near its current pace of 13.7 million vehicles for the rest of this year.

In May volume brands boosted discounts in the region's five largest markets by 17% year on year, according to Reuters, which cites a confidential industry research.

Europe's car demand has plunged to less than 14 million vehicles per year from a peak of 18 million in 2007, de Waard notes. Because auto capacity has not contracted fast enough, carmakers must lure consumers with big price cuts and other incentives to clear out excess inventory.

He adds that consumers now expect lower prices, in part because of Europe's economic recession.

Ford last month narrowed the loss estimate for its European operations to $1.8 billion (€1.4 billion) from $2 billion (€1.5 billion). De Waard says the unit has improved its profitability by shifting some sales from low-margin sales car rental companies to more lucrative business fleets and consumers.