Clunkers scheme boosts car manufacturer Ford

Nov 3 2009 by Iain Laing, The Journal

CAR giant Ford has reported its first earnings growth in more than a year thanks to the US “cash for clunkers“ scheme and cost-cutting efforts.

America’s second largest carmaker posted underlying pre-tax operating profits of £672m for the three months to the end of September, £2.4bn higher than a year earlier.

The group’s North American division also returned to the black for the first time since the first quarter of 2005.

And Ford said it now expects to be “solidly profitable“ on an underlying basis in 2011, having previously guided to deliver a break-even or better result.

The firm – which employs around 35,000 people in the UK across its operations and dealerships – is benefiting from the US government’s scrappage scheme to encourage sales of new cars.

But Ford also said better results were being driven by increases in market share and cost savings.

It cut costs by £611m during the quarter, having slashed jobs across the US and Europe, which offset a £489m drop in sales.

Alan Mulally, Ford president and chief executive, said: “Ford is making tremendous progress despite the prolonged slump in the global economy.

“Our solid product lineup is leading the way in all markets. While we still face a challenging road ahead, our One Ford transformation plan is working and our underlying business continues to grow stronger.”

The group had been hit hard by plunging sales amid the recession, seeing full year losses widen to £8.9bn after sales plunged by 36% in the final three months of the year.

It launched a major restructuring to halt the decline, while the group has also driven out a line-up of new models. Ford also confirmed that its Focus and Escape cars had been among the top new vehicles bought under the so-called cash for clunkers scheme.

Across Europe, Ford reported a pre-tax operating profit of £118m, up 180% on a year earlier despite sales falling by 22%.