GENEVA - The US-based auto giant Ford Motor Company warned Tuesday that it was expecting a tough year in Europe because of price cutting and rising steel prices.
"We're expecting this year to be really tough in Europe," Ford Europe chief executive Lewis Booth.
"We still don't see any recovery in the German market at all. Every year we keep thinking: this is the year it's going to happen ... No sign whatsoever in Germany," he added, referring to Europe's largest market.
Although Spain was "strong" other major west European markets were uncertain, while Asian makers took advantage of exchange rates that helped "distort the marketplace", according to Booth.
"There are more new competitors: we're seeing the Koreans and the Japanese making great inroads while the euro is so strong against their domestic currencies," he said.
"Turkey, which was a very important market to us last year is probably going to reduce in size by 25 percent down to more normal levels because last year was very high," Booth added.
The Ford Europe chief forecast that the overall European market would shrink slightly compared to last year while prices would still be under pressure.
Sharp discounting to try to attract customers last year helped sales grow moderately but have further pared down margins for manufacturers.
Booth said rebates offered to customers were exceeding 10 percent on medium sized range.
Yet, car makers were also facing pressure to drive up prices with rising costs of raw materials.
"We see continued pressure on commodity prices with steel price increases," Booth said.
The senior Ford Europe executive stuck to his forecast of a 100 million to 200 million dollar profit for 2005, compared to 140 million dollars in 2004.
03/01/2005 17:09 GMT