DETROIT -- Ford of Europe increased vehicle sales 11 percent to 1.3 million vehicles in its core markets and finished 2015 with its first operating profit in three years. Jim Farley, who started his second year as Ford of Europe president on Jan. 1, wants the division to be a consistent profit contributor to its U.S. parent. To do that, Farley will be even more selective on the segments where Ford competes.
Farley, 53, was interviewed by Automotive News Europe Editor Luca Ciferri, Managing Editor Douglas A. Bolduc and Correspondent Christiaan Hetzner last month at the Detroit auto show.
Q: Ford made money in Europe last year for the first time since 2011. Are you at the start of a long winning streak?
A: I don't think any executive gets up in the morning and says "I love to break even." We are here to make a sustainable and vibrant business.
What kind of profit margin is possible in Europe given that most automakers have not addressed the region's overcapacity issue?
That's the No. 1 question I faced when I got my job. I think the answer is multifaceted. The first thing is: Be careful where you compete.
By leaving less-profitable segments Ford could achieve above-average industry profitability in Europe?
Where you compete is the billion-dollar question for brands like Ford in Europe. We have had great success with our SUV and [commercial vehicle] businesses. We have great success with our more emotional products like our ST performance line. That has encouraged us to challenge ourselves. Where you compete and where you don't compete is the most important thing between a 2 percent and a 5 to 7 percent operating margin.
Can you reveal your target?
As a company we've said globally that we want a margin of 8 percent. To be a good investment for the company, we will have to be in that range.
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