Ford Motor Company (NYSE:F) shares sink 1.50% as a report shows that the car sales in Europe continued to decline throughout the first half of 2012.
The car producer’s sales plunged 16% to 124,200 cars in the month and 9.6% to 733,900 cars in the first six months of fiscal 2012. The automaker had reported a plunge of 20% in the net profit of $1.6 billion in the first quarter of 2012 as compared to net profit of $2 billion reported in the same period year ago. Though the earnings per share of $0.39 beat estimates of $0.35 per share but it was still down 17% as compared to earnings per share of $0.47 posted in the first quarter of fiscal 2011.
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The main driver of such lower profits was higher tax expense, lower operating results and higher charges in the U.S. under the UAW agreement in 2011.
The Company had to recall 8,266 units of its recently launched Escape compact sport-utility vehicles (SUVs) in order to fix their improperly installed carpet padding. Previously in May 27,000 units of Windstar minivans from Virginia had been recalled due to certain defect caused by salt that could cause the axles to rust, crack and even break, leading to loss of vehicle control.
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The auto industry on a whole has been unable to escape the slump in Europe caused by the lower consumer confidence, weak economy and the sovereign-debt crisis in Euro zone. Car sales in European Union has declined 6.8% to 6.64 million units in the first half of 2012 in spite of the automakers providing free road tax, high discounts and incentives.
The auto industry has declined 6.96% in the last six months.