It is a hard decision taken by Ford Motor Company (NYSE:F) and would not be a surprise for some analysts, as well as, investors. The company indicated that it would wind up its factory in Japan and Indonesia before the end of the current year. The second largest American automaker has obviously thought that there was no point in running the operations in the absence of the prospects of seeing sales improving to deliver profitability in the region.
Pursued All Possible Option
Ford Motor Company (NYSE:F)’s Asia Pacific spokesperson, Karen Hampton, told Bloomberg that the step was taken after careful consideration of every possible option before it. However, the automaker assured its customers that there would not be any disturbance in offering ongoing support for service or warranties or spare parts to its customers.
Hampton disclosed that it was quite clear that there was no possibility of finding any path to sustained profitability. She said that the company was also at a loss to find any acceptable return for its investments either in Indonesia or Japan in the near-term. However, the company indicated its commitment to serve the international markets. At the same time, Ford Motor Company (NYSE:F) is restructuring some of its business aggressively as it was not able to find any meaningful path to achieve either sales growth or profitability.
Domestic Firm Dominates
The move appeared to have come after Toyota Motor Corp (ADR) (NYSE:TM)’s continued dominance in its home turf. The Japanese firm has also been enjoying its dominance in Indonesia where its affiliate, Daihatsu Motor Co. is ruling the rust. The American firm might have felt that it would be better to invest back at home rather than keep losing its money overseas.
Ford Motor Company (NYSE:F) was not the only one to exit Indonesia. Last year, General Motors Company (NYSE:GM) also took a similar decision to wind up its factory in Southeast Asia’s biggest car market. As the economy was slowing down, the automakers do not see any turnaround in the next couple of years.
Ford has been operating in Japan since 1974. The company has 52 dealerships with 292 people employed. During previous year the company sold close to 5,000 vehicles in Japan with market share of 1.5 percent for newly imported cars.