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Ford F is making a bold move to revive its struggling European business. The U.S. legacy auto giant plans to inject up to €4.4 billion ($4.8 billion) into its German operations, aiming to reduce debt and improve competitiveness. Its German arm, Ford-Werke, has €5.8 billion ($6.3 billion) of debt, making this cash infusion crucial. This move comes at a time when the European auto industry is under pressure from rising costs, weak demand and growing competition from Chinese EV makers like BYD Co Ltd.
Ford has been losing money in Europe for years and has been cutting costs to survive. In November, it announced plans to cut another 4,000 jobs by 2027, blaming slow EV demand and fierce competition. Now, with this fresh investment, the company hopes to stabilize its German operations and push forward a multi-year recovery plan.
Ford isn’t the only one struggling. Germany’s auto biggie Volkswagen VWAGY is also downsizing and even considering closing plants as it fights to stay competitive. Chinese EV brands are rapidly expanding, forcing traditional automakers to rethink their strategies. Can Ford’s capital injection revitalize its European business and should you place your bets on the stock on this development?
F stock has dropped 20% over the past year and is now hovering around $10. Investors might be wondering if they should buy Ford now, or stay on the sidelines as tariff wars and economic uncertainty lingers? Let’s find out.
Image Source: Zacks Investment Research
Ford’s segments are facing a mixed outlook. While its Model e and Ford Blue segments are under pressure, Ford Pro remains a bright spot.
The Model e division, Ford’s EV unit, continues to struggle. The company lost $5.07 billion in the segment in 2024, even worse than the $4.7 billion loss in 2023. Intense competition, pricing pressure and high investment costs for next-generation EVs are weighing on profits. Ford expects another $5-5.5 billion loss this year, while its closest peer General Motors GM is cutting EV losses and improving profitability.
The Ford Blue segment, which includes traditional gas-powered vehicles, is also showing signs of weakness. Ford projects 2025 EBIT of $3.5-4 billion, down from $5.3 billion in 2024. Lower ICE vehicle sales, a shift in product mix and foreign exchange headwinds are expected to drag down profits.
However, Ford Pro, the company’s commercial vehicle business, is thriving. In 2024, revenues rose 15% to $67 billion, and EBIT jumped from $7.2 billion to $9 billion, with a 13.5% margin. Strong demand for Super Duty trucks and Transit vans, along with growth in software and service subscriptions, is driving this success. Ford’s focus on software, technology and services could be a key growth driver moving forward.
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