Ford sees SUVs filling Russia gap, aiding European unit

Bloomberg News - Ford Motor Co. (F), trying to end losses in Europe, said government aid and growing supplies of its sport-utility vehicles in Russia will boost demand in one of its most underperforming markets within the region.

Local production of the Kuga SUV, which is marketed as the Escape in the U.S., and the smaller EcoSport will combine with the Explorer that Ford started building in Russia in April to deliver an uptick in second-half sales, said Ted Cannis, chief executive officer of the Ford Sollers unit, without providing specifics. Ford's deliveries in Russia fell 18 percent this year through May, trailing a 4.5 percent industrywide drop.

"The government may take some actions to improve industry sales, and with our own actions of broadening the SUV portfolio and more availability of commercial vehicles, I would expect a significant improvement in the second-half performance," Cannis said by telephone. Ford Sollers is a joint venture between Dearborn, Michigan-based Ford and OAO Sollers.

CEO Alan Mulally is filling holes in Ford's product portfolio in a country that could soon pass Germany to become Europe's largest market. New-car sales in Russia may total 2.8 million to 3.1 million units in 2013, according to AEB Automobile Manufacturers Committee estimates.

Achieving the upper range of that projection could propel Russia past Germany, which totaled 3 million deliveries in 2012, according to Bloomberg Industries.

Russian Economy

Russian President Vladimir Putin indicated the government was preparing measures to boost the economy, including incentives for the auto industry that could be similar to those offered in 2008, Cannis said. The previous program boosted demand for lower-priced cars and helped clear older, high-emission vehicles from Russian roads, he said.

Ford is overhauling its European model lineup. That includes a redesigned Mondeo mid-size sedan by late next year, when the company foresees the market beginning to rebound from a six-year slump. The automaker forecasts losses in the region will widen to about $2 billion this year from $1.75 billion in 2012.

Ford fell 1.2 percent to $15.47 at the close on June 28 in New York. The shares have increased 19 percent this year compared with a 13 percent gain for the Standard & Poor's 500 Index.