Ford Motor to pull out of Japan and Indonesia before year-end

January 26
7:26 PM 2016

Ford Motor announced on Monday about its decision to pull its operations out of the Asian countries, Japan and Indonesia, before the end of this year. It cited 'closed markets' in both the countries which has made it difficult for the renowned automaker to increase sales or sustain profits.

For Japan, the company stated that the current structure of the 12-nation Trans-Pacific Partnership trade agreement will curb its growth. As represented in The Japan Times, spokesman Neal McCarthy said, "Japan is the most closed, developed auto economy in the world, with all imported brands accounting for less than 6% of Japan's annual new car market." He also mentioned declining auto sales in the coming years mainly due to an aging population and young generation's lack of interest.

The company had developed 52 dealerships with approximately 292 employees. Last year's sales number in Japan was a mere 5,000 and it held a 1.5% share of the imported new car market. Joe Hinrichs, Ford's president of the Americas, has sent out a strong message for the Japanese government. He said, "We hope the U.S. government will send a clear message that any future trade policy with Japan must ensure a level playing field and not come at the expense of American workers."

Likewise for Indonesia, Deal Street Asia discloses facts as to why Ford has decided to exit the Indonesian markets. Bagus Susanto, Managing Director of Ford Motor Indonesia, said, "We have announced the difficult business decision to withdraw from all of our operations in Indonesia in the second half of this year. This includes closing Ford dealerships and stopping the authorized import and sales of all Ford vehicles." The company had entered Indonesia in 2002. It now operates through 44 dealerships and has around 35 employees. Last year's sales totaled 6,000 vehicles and held 0.6% share of the total new car market.

After this news, the automaker's stocks have plummeted big-time, reports The shares were already lower recently and now moved further down its $10.44-$16.74 range. It has declined by 0.74% or $0.09 and now stands at $12.05 per share. Around 19.45 million Ford Motor shares have changed hands, which ultimately led to a decline of 19.82% since June 2015.

The company stated that its employees and dealers were communicated about this news on Monday. It plans to provide detailed explanations to its customers regarding its post-sale services like servicing, providing new parts or repairing the old ones under warranties. Ford is now busy tying such loose ends before wheeling its businesses out of Japan and Indonesia before the end of this year.

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