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Ford CEO Mulally Plots Europe Comeback

Showing his trademark enthusiasm and two new models scheduled to hit European showrooms, Ford Motor CEO Alan Mulally laid out the automaker’s plan to bolster its faltering sales in Europe. The plan hinges in part on 15 new and redesigned models Ford will sell in Europe over the next 5 years.

Alan Mullaly
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Alan Mullaly

“This is still a very, very significant market for us, nearly 14 million units,” Mulally said during an interview on CNBC’s "Worldwide Exchange."

“Clearly they are going through a tremendous recession, but just like the U.S. we are investing during the toughest of times so the customers have vehicles they want and value as the economy starts to comes back.” (Read More: ECB to Buy Sovereign Bonds in New Program to Save Euro.)

Mulally unveiled Ford’s European product plans at a press event in Amsterdam. Inside the city’s newest arena, Mulally focused on models he believes will grow the company’s European sales. In the first half of the year, Ford’s sales in Europe dropped 10 percent and its market share of 7.7 percent is down 0.6 percent.

No Plant Closing Announcement

While Mulally and his European leadership team laid out the line-up in hopes it will rebuild sales, they did not touch on how the company will cut its mounting losses and excess capacity in Europe.

“We don’t have anything to announce today but we are working with all the stakeholders to continue to implement that plan just like we have in the U.S.,” Mulally said.

In the first half of the year, Ford lost $553 million in Europe and the expectation on Wall Street is for the company to lose more than $1.5 billion in Europe this year. One analyst believes Ford could lose up to $2 billion in Europe. (Read More: Ford's Europe Problem Not a Problem?)

The problem is Ford’s inability to close one or more of its 10 plants in Europe. European labor laws and current contracts with unions in Europe are keeping Ford from shutting plants. As a result, Ford has tried to limit losses by curtailing production.

“We are taking down our production to the real demand and we are taking the actions on the cost side to deal with that,” Mulally said.

Ford shares stalled

As Ford slogs through a lingering recession in Europe, investors are steering clear of Ford shares. In the last year F shares are down 5 percent and year-to-date the stock is down 10 percent.

When asked what he would say to investors who are waiting for Ford to take more decisive action in Europe, Mulally said, “We will continue to take action to match the production to real demand and continue to structure ourselves accordingly.”

Meanwhile, Mulally remains optimistic the company’s renaissance in the U.S. will continue. The automaker boosted sales by 13 percent last month, which was above street estimates. Year-to-date, Ford has increased sales 5.5 percent. Mulally expects pent-up demand in the U.S. to continue pushing strong sales for the rest of the year. (Read More: Consumer Demand Drives Strong August Auto Sales.)

—By CNBC's Phil LeBeau
@Lebeaucarnews

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