Special Coverage

Frankfurt Auto Show

FRANKFURT – Ford of Europe Inc. has increased its share this year in 16 of its 19 main Western European markets, and its August penetration of 8.1% was its highest since 1998.

Although Ford sales are down 6.6% from a year ago, the overall market is off 11.2%.

In this difficult time, says Ford of Europe CEO John Fleming, “Improving market share is a good omen for us. Our shareholders want profit, not market share, but it has been gained because customers want the vehicles.”

European sales benefited for many months this year from incentives in several countries, the biggest of which was Germany’s E2,500 ($3,668) bonus for scrapping an old car and buying a new one.

That ended Sept. 2, and a similar U.K. incentive will end in another month, but Fleming says he believes Ford will hold onto its market share gains.

For one thing, says Ingvar Sviggum, vice president-marketing, sales and service, “it is in markets without scrapping incentives where we have had the strongest market share gains this year.”

Fleming says the scrapping bonuses have accelerated a trend toward small cars, which helped the Fiesta, Ka and Focus.

But in markets where they are ending, such as Germany, there will be relatively better sales of larger cars, including the new Ford Grand C-Max introduced at the Frankfurt show and slated to arrive in North America in late 2011.

He argues scrapping incentives ought to stay in place until the underlying economy improves, or should be scaled back gradually as in France to provide a “softer landing.”

In France, Ford is the leading import and has gained half a point of market share this year, he says.

However, economic conditions are too volatile for Fleming to make a sales prediction now that incentives are ending. “We are not issuing market guidance for 2010,” he says.

The scrapping bonuses were “hugely successful, not only for the OEs, but for the dealers and suppliers. It put liquidity into the system,” he says.

“We saw orders go down (in Germany after Sept. 2), but we are starting to build again. When the scrapping incentive started in Germany, we had no idea what it would do. We will have a better idea (of what will happen after it ends) when we see the first effects.”

On other subjects in a wide-ranging interview, Fleming says Ford is not worried about Magna International Inc. being a component supplier as well as a competitor, if it becomes a partial owner of Adam Opel GmbH.

“They have promised to keep our intellectual property separate from Opel Magna, and I believe what they are saying,” he says. “We have no intention of moving away from Magna.”

He also says Ford has no plans to build a large car in Europe, because “we have to put our resources where we get the maximum benefit.”

As for electric vehicles, although Ford is showing an electric Focus in Frankfurt, Fleming says, “We won’t swing suddenly away from current engines. The electric vehicle is a developing technology where we all have a lot to learn. When the infrastructure is ready, we need to be able to deliver them.”

He provides no update on talks to sell Volvo Car Corp. but leaves no doubt the Swedish subsidiary will be sold.

“We are not selling Volvo because Volvo was doing something wrong,” Fleming says, “but because we believe it is in the best interest of Ford Motor Co. and our desire for vehicles we want to invest in and launch in the future under One Ford worldwide.”