Ford gives up on Japan and Indonesia

By REUTERS | 25 January 2016

BEIJING/TOKYO: Ford said today it will close all operations in Japan and Indonesia this year as it sees "no reasonable path to profitability" in the two countries where it has struggled to gain market share.

Ford will exit all areas of business, including shuttering dealerships and stopping sales and imports of Ford and Lincoln vehicles, according to an email from Asia Pacific president Dave Schoch to all employees in the region viewed by Reuters. Product development carried out in Japan will be shifted elsewhere.

"Unfortunately, this also means that our team members based in Japan and Indonesia will no longer work for Ford Japan or Ford Indonesia following the closures," Schoch wrote in an email regarding the decision that was sent to employees today.

Ford, one of Detroit's "big three" automakers, follows in the footsteps of General Motors Co, which last year decided to stop making GM-branded cars in Indonesia - with the loss of 500 jobs - amid intense competition from Japanese rivals.

Ford began operating in Japan in 1974 and has 52 dealerships in the country, employing 292 people. Last year, it sold around 5,000 vehicles in Japan and held a share of around 1.5 percent of the imported new car market.

In Indonesia, where it entered the market in 2002, Ford has a staff of 35 and sells through 44 franchised dealerships. Last year, it sold around 6,000 vehicles, taking a 0.6 percent share of the total new car market in a country struggling from economic slowdown.

"In Indonesia, without local manufacturing ... there's just really no way that automakers can compete in that market, and we do not have local manufacturing," said a Ford spokesman based in Shanghai, confirming the content of the email.

The company has also had a tough time selling its Fiestas, Mustangs and Explorers in the Japanese market, which is dominated by Toyota Motor Corp, Honda Motor Co, Nissan Motor Co and other domestic brands.

On top of that, vehicle sales have been falling in Japan as the population ages and demand for cars by young people decreases.