The Ford logo is seen on the rooftop of Austria's Ford head branch in Vienna March 19, 2013. Europe's car sales fell last month to their lowest February level in at least 23 years, industry figures showed. [Photo / Agencies]

Ford's plan to cut jobs and close plants, once hailed as proactive, may not be enough to halt losses in Europe - where moves to rein in margin-crushing discounts have sparked a further sales plunge.

The US carmaker initially earned investors' praise, and unions' wrath, for three plant closures and 6,200 layoffs designed to reduce excess production capacity, while rivals including General Motors put off the tough decisions.

But less than five months later, Ford's slumping sales show it still has some way to go and may struggle to win back business from competitors as it rebuilds profitability.

Ford's European slide since December, the worst three-month sales performance by a mass automaker, reflects efforts to end a discount blowout in which it hiked incentives to shift a glut of cars, according to industry insiders and unpublished data.

The company has said it is pulling back from "unprofitable channels" including sales to car rental firms, even at the risk of losing market share.

"Share is interesting, but share doesn't pay the bills," Ford's Europe chief Stephen Odell told reporters at the Geneva auto show earlier this month. "You have to have a business that's profitable."

Overcapacity

The euro zone crisis has shone a light on the region's overcapacity, which locks carmakers into paying high fixed costs to build fewer vehicles. Car sales fell to a 17-year low in 2012 and are expected to drop further this year.

In October, while GM was still in union talks over the possible closure of a German Opel plant after 2016, Ford announced the job cuts and the closure of factories in Genk, Belgium, and two British locations.

Ford was the second big automaker to act on overcapacity after PSA Peugeot Citroen, whose solvency hangs on a rescue plan and plant closure unveiled three months earlier.

The 18-percent capacity cut will restore European profitability by mid-decade, Ford pledged at the time - provided it also maintains its slice of the contracting market. Further cutbacks could follow if the strategy falls short, executives also warned.

But Ford registrations tumbled 23.4 percent in the first two months of the year, more than twice the market decline, data from the European Automobile Manufacturers' Association shows. Its market share fell 1.2 points to 6.6 percent.

"The assumptions they made when they published their plan are no longer valid," said Philippe Houchois, a London-based analyst with UBS.

"You can only restructure when you've got a view of where the market is going."

Production in Genk, earmarked for closure next year, has only just resumed after industrial unrest following the restructuring announcement. Ford said this week it will pay $750 million in severance to workers at the Belgium plant.

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