Ford Europe Chief Quits After Heavy Loss

Ford Europe said on Tuesday its President and Chief Operating Officer Martin Leach had decided to leave the company just a month after it posted a shock loss for the second quarter.

The departure of Leach - who was the man behind Ford's deal with the Jordan team - follows intense speculation about management changes at the European arm of the world's second-biggest car company, fuelled by a $525 million pre-tax loss for the three months ending in June, which analysts say reflects a struggle to return to long-term profits.

David Thursfield, executive vice president of Ford and president of international operations, will oversee the business until a successor is appointed, a Ford Europe spokesman said. He emphasised that Ford's strategy remained unchanged in Europe.

"Martin contributed to our growth in Europe under challenging conditions," said Thursfield in a statement. "As we move forward, we will build upon that foundation. The Ford of Europe team remains committed to improving our financial results and to delivering outstanding products."

Thursfield also reiterated comments that the unit was making extra efforts to cut costs to offset current market conditions. The unit of Ford, itself battling against tough conditions in the United States in its centenary year, had returned to profit after cutting jobs, closing plants and launching 35 new models since 2000.

In Reverse?

Ford Europe blamed mainly falling car demand and fierce pricing competition for the second-quarter loss but has pledged to post a substantial improvement in the third quarter.

Ford shares traded flat at the open on Wall Street.

"This does make you wonder about Ford Europe's long-term future because at the height of their new model portfolio they were still only just over break even and that isn't very impressive," said a Germany-based analyst.

Other volume manufacturers, including Europe's two biggest carmakers Volkswagen and Peugeot Citroen, are also suffering from the tough conditions and from a stronger euro against the U.S. dollar and British pound.

Last week Ford Europe manufacturing chief John Fleming stopped short of pledging a return to profit this year but said the group's three percent return on sales target for around the middle of the decade was achievable.

A spokesman said those statements were still valid.

"Martin Leach made the decision to leave himself and this does not change anything regarding our goals or our strategy," said the spokesman, who declined to say when a permanent successor would be chosen.

There has also been speculation about possible closer cooperation between Ford Europe and Ford's luxury brands Jaguar, Land Rover, Aston Martin and Volvo, currently headed by Mark Fields under the umbrella of the Premier Automotive Group.

Ford Europe declined to say what Leach's future plans were but some industry watchers speculated that a vacancy may soon open up at the auto arm of Italy's loss-making Fiat.

Fiat declined to comment on whether Leach might be in the running to take over as Chief Executive Officer at Fiat Auto whose incumbent Giancarlo Boschetti is nearing retirement age. Several European car executives have been named as possible successors.