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5:39 pm
Wed July 9, 2014

Europe auto industry faces headwinds....but more recalls not one of them

Ford sales in Europe rose 6.6% in the first half of 2014
Credit Ford Motor

The auto industry in Europe may be on the way back up, after hitting rock bottom last year, but its woes are by no means over, says Ford's head of Europe, Middle East and Africa, Stephen Odell.

Overcapacity is a persistent concern, he says.   Some European factories are still operating at about 70% of their capacity, although Ford itself has taken steps to reduce its factory and labor costs - having closed one Ford plant in the U.K. and soon to close another in Belgium.

Odell says the biggest factor depressing car sales is the 20 to 25% unemployment rates in southern European countries like Spain and Greece.

"I think the biggest inhibiters is probably employment levels," Odell told a roundtable of journalists in Dearborn.  "Which is why, in our forecast, we have a sort of modest and slow recovery for the next four to five years."

Odell says Ford does expect to regain profitability in Europe next year.

Meanwhile, Europe is not dealing with the surge in recalls affecting the U.S.  That surge, partly sparked by a controversial recall by General Motors for a faulty ignition switch, recently spurred Ford in the U.S. to increase its rainy day fund for increased warranty and recall costs.