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Ford Motor Company UK

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Ford has been the UK's top-selling car brand for 40 years, and celebrated its centenary in the country in 2013. For much of that period Britain also served as the headquarters for Ford's European business, but this was transferred to Germany in 1998. Even so, Britain remains Ford's biggest European market by far by sales volumes. Europe has long been one of the group's most troubled regions financially, and Ford has announced a series of measures since 1999 designed to cut costs and boost profitability. These included the winding down of car production at its core Dagenham factory.

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Brand & Activities

Ford has a long record as the UK's leading car brand, but that position has come under pressure from both competitors and economic forces. The company needs to keep rejuvenating its offering if it is to fend off the fierce competition from traditional rival Vauxhall and fast-growing Volkswagen. Ford no longer makes passenger cars in the UK, with almost all models imported instead from Europe. However its long-time home in Dagenham, Kent is one of the largest manufacturers of diesel engines in Europe, and there are two other plans making engines and transmissions. A factory in Southampton making Transit vans was closed in 2014, with production moved instead to Turkey. Ford is now the only brand marketed by the group in the UK, following the sale of Jaguar and Land Rover in 2008.

The main Ford Motors business manufactures and markets a range of leading models including the Focus, Fiesta, Galaxy full-size MPV, Mondeo and entry-level Ka. Newer additions are the collection of MAX MPVs. The first of these was the S-MAX, voted European Car of the Year in 2007, followed by the midsize C-MAX and compact B-MAX. The portfolio also swelled in 2008 to welcome the new Kuga compact SUV. Ford has been the UK's #1 automobile brand since 1976. For several years, Ford faced intense competition from its nearest rival, GM-owned Vauxhall, which steadily encroached on Ford's lead. The gap in share between the two narrowed from 2 clear percentage points in 2003 to under 1 point for 2007, before widening again since 2008.

For 2016, SMMT recorded new passenger car registrations of 318,316 units for Ford, down 5% on the year before and equivalent to 12.7% share. (That compared to 10.2% for Vauxhall and 8.5% for the Volkswagen marque. However, Volkswagen Group's combined share including Audi, Skoda, Seat and Porsche, was 19.9%). In the light commercial segment, Ford had a dominant 30.8% share in 2016 from over 118,000 new registrations, more than double closest rival VW and as much as its next three rivals combined. Britain is Ford's biggest European market by far, almost twice the size of second-paced Germany by sales volumes, and over four times Italy and France.

The Fiesta replaced the Focus as the UK's best-selling car for first time in 2009, pushing its stablemate into the #2 spot. It has retained its leadership ever since, with sales of 120,525 units in 2016. The Focus held third place with 70,545 units, behind of Vauxhall's Corsa. The Ford Transit has been the best-selling model in the medium commercial vehicle segment every year since 1965, and accounts for almost all the company's LCV sales. The group is a leading sponsor of rally and Formula One racing, under the Ford Sport banner.

Ford Retail Group is Ford of Britain's wholly owned dealership arm, now operating under the unified TrustFord brand. It is the world's largest dedicated Ford dealer, with 65 dealerships in the UK, and responsibility for franchising all other local dealers. It owns the chains previously known as Polar Ford and Dagenham Motors. In total there are almost 800 Ford dealerships in the country. Edinburgh-based Kwik-Fit, a national network of 2,500 service centres, spent three years as part of the Ford group. Acquired in 1999, it was sold at a substantial loss in 2002.

Financials

For 2013, UK-registered Ford Motor Company Ltd reported revenues of £9.25bn and a pretax profit of £253m.

Background

The UK was the site of Henry Ford's first international car-making operation. Ford Motors entered the UK in 1911 with a factory in Manchester. Mass production of Model Ts commenced three years later using the company's revolutionary moving production line. In 1914, Ford turned out more than 8,000 cars in England, more than the next five British carmakers put together. The Model T was also by far the cheapest car on the market, selling for just £125. However there was considerable local resistance to Ford's domination of the industry. The press generally ignored the company, while the government responded to the outbreak of World War I by imposing a stiff tax on imports of cars and components. Ford responded by setting up new facilities to make or source locally parts that had previously been imported from Detroit. In the 1920s, the government tried another set of tactics designed to hold back Ford and boost British-owned companies, increasing road tax on the higher-powered Model T's. This finally began to take effect with the public, and in 1924, Ford was overtaken by home-grown Morris as the country's leading car manufacturer.

By the 1930s, Morris had increased its share of the British market to around 40%, and threatened to become even more dominant with the introduction of moving production lines in 1934. Ford attempted to counter its rival by commissioning a huge new factory at Dagenham. When it opened, it was the biggest car plant in Europe, but the astronomical costs almost forced the business into bankruptcy. Ford Britain was saved by the launch of the Ford Popular in 1935, a four-seat saloon retailing for the absurdly cheap price of £100. It was an enormous success.

It was also increasingly apparent that American car designs were inappropriate for the UK market. In the 1930s, Ford Britain's managers asked the American board for permission to design their own cars. The man chosen to head this extremely risky project was Patrick Hennessey, head of the purchasing department, who went to Detroit in 1936 to present the case to Henry Ford himself. Ford was entirely won over, and greatly impressed by Hennessey, who was later elevated to chairman of the UK business. (The founder's grandson, Henry Ford II, always referred to him as "Uncle Pat").

Despite the popularity of Ford Britain's home grown designs in the late 1940s, the company continued to be overshadowed by British-owned manufacturers Morris, and its newer competitor Austin, run by the former general manager of Morris. In 1951, Morris and Austin extended their lead by merging to form The British Motor Corporation, then the world's 4th biggest car manufacturer, and the largest outside the US. The group had domination of the UK car sector with just over half the market. [See Rover Group profile for more]. Yet from the start, BMC was plagued by problems, not least continuing internal rivalry between Morris and Austin. These businesses were so preoccupied with their internal wrangling that they failed to notice that their market share was steadily falling, while Ford sales were on the increase. The Ford Anglia, launched in 1956, was a significant success with car buyers, but was entirely eclipsed by the massive popularity of the Ford Cortina, first introduced in 1962. In 1965, Ford UK teamed up with its German counterpart in the group's first pan-European design partnership. The result was the Ford Transit van, introduced in 1965, and which has dominated the commercial vehicle market in Britain for more than 40 years.

As Ford's fortunes rose, BMC was digging itself an even deeper hole. It over-spent to buy Jaguar in 1965, then spent even more to launch new model, the Austin 3-litre, a huge flop. By 1967, BMC's market share had dwindled to just 28%, only fractionally ahead of Ford. The government responded by engineering the combination of BMC with Leyland Trucks and Rover to create British Leyland Motor Corporation in 1968. Unit sales were over 1 million cars a year, and combined market share put the business once again clearly ahead of Ford. During the early 1970s, the whole country was plunged into a series of industrial disputes that almost destroyed the UK economy. All manufacturers, including Ford, were affected, but the damage to British Leyland, already swollen with unnecessary production costs, was catastrophic. By 1975, the business was close to collapse, and the new Labour government placed the business under state control. A year later it made a half-hearted attempt to sell it to Ford, but with no success. As British Leyland sales continued to tumble, Ford overtook it to become the UK's leading car manufacturer in 1976, a position the company has held ever since.

During the 1980s, the new Conservative government promised to reprivatise British Leyland. To forestall a Japanese takeover, Ford negotiated to buy the company's brands, but not its factories, but was turned down. Instead Jaguar was floated in 1984 (it was bought anyway by Ford five years later). Yet the government continued talks with Ford and also General Motors over a rescue of what was left of British Leyland. Those negotiations were finally blocked after a group of rebel Conservative MPs demanded that the government "resist the sell-off of the remains of the British motor industry to the Americans". In 1988 the renamed Austin Rover Group was finally sold to British Aerospace for £250m.

Throughout the 1980s and 1990s, Ford consolidated its position as the country's leading carmaker with a series of hugely successful models. The Cortina was succeeded by the Escort, Sierra and Fiesta models which became an intrinsic part of British culture. Alex Trotman, who had begun work in the Dagenham factory during the 1950s, spearheaded the company's development in the UK, later becoming overall chairman and chief executive of the whole Ford group in 1993. Yet market leadership came at a heavy price. The cost of investment in its British plants, combined with the fact that its expensive 1990s models Mondeo and Scorpio were imported from the continent, left Ford UK nursing a loss for almost every year of the 1990s.

Towards the end of the decade the company stated that it aimed to be the world's leading automotive company, covering every aspect of car production and maintenance. The UK was earmarked as the test-bed for a new strategy which involved bringing back under the corporate umbrella services which had previously been outsourced. In 1998, Ford teamed up with Hong Kong-based Jardine Matheson in order to acquire the company's biggest dealerships in the UK (where cars are generally sold through franchised outlets). Jardine was already the UK's second largest Ford dealership, and the first acquisition by their joint venture vehicle Polar Motor Group was publicly quoted Dagenham Motors, which handled around 4% of Ford's UK sales. The £28.8m purchase in December 1998 gave Polar around 7% in total of UK Ford sales. A year later Ford acquired a 49% stake in Pendragon, the largest UK car dealership, for £20m. In 1999, Ford was rumoured to have entered the bidding for the breakdown division of the RAC (Royal Automobile Club), the second biggest UK rescue service after the AA. (In the end RAC was acquired by Lex Service. Subsequently, Ford also contacted the AA regarding a possible takeover, but dropped out of the bidding when the price went too high.) Later, a further arm was added with the £1bn takeover of after-care business Kwik-Fit and the group also spent £55m to acquire the Stewart Formula One motor-racing team, renamed the Stewart-Ford team.

However the year was marked by worsening performance in Europe. In order to boost its operations in Germany, Europe's biggest market by far, the group moved its European HQ to Frankfurt in summer 1999. Although the company had successfully held onto its leadership of the British market, European share had slipped, especially in Germany. The group also revealed that its profits in Europe had plunged from $193m in 1998 to just $28m. The core of those financial problems was later revealed to be the UK. The group eventually admitted that Ford Europe's 1999 figures had included a pre-tax loss from the UK of £119m ($176m). A few weeks after releasing these figures, Ford announced it would close down its Dagenham factory as a main production centre, with a loss of two-thirds of the workforce. It was later forced to revise these plans, making the plant its main diesel engine unit, and cutting back redundancies.

Losses grew still further in 2000, reaching around £356m (on sales up 8% at £9.4bn) including the cost of restructuring in Dagenham. However the result was a leaner and more flexible beast. By 2001 the company was claiming to be back on track for profits. However the massive losses accumulated that year by the company's US parent led to further trimming of its UK operations. The Kwik-Fit business was sold in 2002 to venture capital group CVC for just £330m (although Ford retained a minority stake). The group wrote off a £500m loss on the three-year experiment.

Last full revision 31st August 2015

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