Ford 2002 Annual Report Download - page 41

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our automotive sector losses in Europe were $725 million from continuing operations in 2002, compared with earnings of
$268 million a year ago. The decrease reflected primarily the loss related to our sale of Kwik-Fit, charges related to restructuring
actions involving our Ford-brand Europe and Premier Automotive Group operations (discussed above), as well as a less
favorable vehicle mix primarily at Jaguar and lower production to reduce dealer inventories.
In 2002, approximately 17.2 million new cars and trucks were sold in our nineteen primary European markets, down from 17.8
million units in 2001. Our share of those unit sales was 10.9% in 2002, up 0.3 percentage points from a year ago, due primarily
to share improvement for Ford-brand vehicles (up 0.1 percentage points to 8.7%), Jaguar brand vehicles (up 0.1 percentage
points to 0.3%) and Volvo brand vehicles (up 0.1 percentage points to 1.4%).
Our Automotive sector losses from continuing operations in South America were $295 million in 2002, compared with losses of
$776 million in 2001. The improvement reflected primarily the non-recurrence of the 2001 asset impairments and other one-time
charges largely related to our Revitalization Plan. The results also reflected the adverse effects of currency devaluation, partially
offset by continuing improvement in operating fundamentals.
In 2002, approximately 1.5 million new cars and trucks were sold in Brazil, compared with 1.6 million in 2001. Our share of those
unit sales was 10.3% in 2002, up 2.1 percentage points from a year ago. The increase in market share reflected market accept-
ance of our new Ford Fiesta model and strong sales performance.
Automotive sector earnings from continuing operations outside North America, Europe, and South America (“Rest of World”)
were $311 million in 2002, compared with losses of $159 million in 2001. The improvement reflected primarily the non-recurrence
of the 2001 pension and restructuring related charges at Mazda, as well as net revenue and volume improvements throughout
our Asia Pacific operations and operating improvements at Mazda.
New car and truck sales in Australia, our largest market in Rest of World, were approximately 824,000 units in 2002, up about
51,000 units from a year ago. In 2002, our combined car and truck market share in Australia was 14.3%, down 0.8 percentage
points from 2001, reflecting primarily strong competitive pressures in the small car segment and the truck segment.
2001 COMPARED WITH 2000
Worldwide losses from continuing operations for our Automotive sector were $6,155 million in 2001 on sales of $130.8 billion,
compared with earnings of $3,664 million in 2000 on sales of $140.8 billion. Adjusted for constant volume and mix and excluding
unusual items and costs related to our Firestone tire replacement action, our total costs in the Automotive sector increased $1.0
billion compared with 2000.
Our Automotive sector losses from continuing operations in North America were $5,488 million in 2001 on sales of $90.8 billion,
compared with earnings of $4,909 million in 2000 on sales of $103.8 billion. The earnings deterioration reflected primarily lower
vehicle unit sales volumes, the charges associated with the Revitalization Plan and the other charges outlined above, significantly
increased marketing costs, costs associated with the Firestone tire replacement action and increased costs associated with
warranty and additional service actions.
In 2001, approximately 17.5 million new cars and trucks were sold in the United States, down from 17.8 million units in 2000.
Our share of those unit sales was 22.8% in 2001, down 0.9 percentage points from a year ago, due primarily to increased
competition resulting from new model entrants into the truck and sport utility vehicle segments, as well as the continued
weakness of the Japanese yen, which creates favorable pricing opportunities for our Japanese competitors. Marketing costs
for our Ford, Lincoln and Mercury brands increased to 14.7% of sales of those brands, up from 11.1% a year ago, reflecting
increased competitive pricing in the form of subsidized financing and leasing programs (such as 0.0% financing during the
fourth quarter), cash rebates and other incentive programs.
Our Automotive sector earnings in Europe were $268 million from continuing operations in 2001, compared with losses of
$1,115 million a year ago. The increase reflected the non-recurrence of the 2000 charge related to asset impairments and
restructuring, as well as increased vehicle unit sales and the effect on depreciation from last year's asset impairment and
restructuring actions.
In 2001, approximately 17.8 million new cars and trucks were sold in our nineteen primary European markets, down from
17.9 million units in 2000. Our share of those unit sales was 10.7% in 2001, up 0.7 percentage points from a year ago,
reflecting increased sales of new Ford-brand Mondeo and Transit models and our acquisition of Land Rover.
Our Automotive sector losses in South America were $776 million from continuing operations in 2001, compared with a
loss of $236 million in 2000. The decrease is more than explained by asset impairment charges and the devaluation of
the Argentine peso.