Ford to Invest €4.4 Billion in German Operations Amid Struggles

FRANKFURT, Germany — Ford Motor Company has announced plans to invest up to 4.4 billion euros ($4.8 billion) in its struggling German operations as part of a strategic effort to revitalize its European business, the U.S. automaker revealed on Monday.

The investment will support Ford-Werke, the company’s German subsidiary, which is currently grappling with 5.8 billion euros of debt. This move aims to facilitate a transformation focusing on cost reduction and increased competitiveness.

“By recapitalizing our German operations, we are supporting the transformation of our business in Europe and strengthening our ability to compete with a fresh product portfolio,” said John Lawler, vice chair of Ford Motor Company.

The announcement comes at a time when Europe’s automotive sector is confronting high operational costs, declining demand, and intensified competition from Asian manufacturers, leading to several plant closures and job cuts across the region. Ford has already reduced its workforce in Europe, significantly in Germany, where rival Volkswagen is also facing challenges.

The capital injection is primarily intended to address issues of overborrowing within Ford-Werke and to provide resources for a multi-year business plan aimed at stabilizing operations. This new funding is set to replace an agreement in place since 2006, in which Ford pledged to cover any losses incurred by its German subsidiary. The shift has drawn criticism from the IG Metall labor union, which has warned that without this agreement, Ford’s German unit could face insolvency if economic conditions do not improve.

“It is crucial for Ford’s German unit to have a sustainable business model moving forward,” IG Metall stated, highlighting concerns over the long-term viability of the subsidiary.

Lawler also urged European policymakers to develop a clear agenda in support of electric vehicle (EV) adoption. He remarked that the slower than anticipated uptake of EVs in Europe led Ford to reevaluate its previous commitment to transition its European production to electric-only vehicles by the decade’s end.

“We need to align emissions targets with consumer demands to ensure a sustainable future,” Lawler added.

The announcement of this substantial investment underscores Ford’s commitment to navigating the challenging landscape of the European auto market while adapting to the evolving demands of consumers and regulatory standards.