Ford to exit Japan, Indonesia on poor sales outlook

The Ford display at the Jakarta Fair on June 30 last year. Ford said it sees "no reasonable path to achieve sales growth" in Indonesia and Japan.
The Ford display at the Jakarta Fair on June 30 last year. Ford said it sees "no reasonable path to achieve sales growth" in Indonesia and Japan.PHOTO: REUTERS

TOKYO • Ford Motor will close down all operations by the end of this year in Japan and Indonesia, where the United States carmaker says it has no path to boost sales or earn profits.

The step is being taken "after pursuing every possible option", Ms Karen Hampton, Ford's Asia-Pacific spokesman, said in an e-mailed statement. The company will provide ongoing support to customers for service, spare parts and warranties, she said.

"It has become clear that there is no path to sustained profitability, nor will there be an acceptable return over time from our investments in Japan or Indonesia," Ms Hampton said. Ford is committed to restructuring parts of its business that "have no reasonable path to achieve sales growth", she said.

The exits by Ford are the latest examples of a carmaker losing patience in struggling car markets in parts of Asia that are dominated by Japanese manufacturers.

General Motors last year closed down its factory in Indonesia, the largest car market in South-east Asia. For 16 straight months, four- wheeler sales on the archipelago have shrunk. If the decline continues, the country will soon lose the distinction of being a one-million-cars-a-year market.

NO PATH TO GROWTH

It has become clear that there is no path to sustained profitability, nor will there be an acceptable return over time from our investments in Japan or Indonesia.''

MS KAREN HAMPTON, Ford's Asia-Pacific spokesman

Industrywide sales in both Indonesia and Japan slumped in each of the last two years.

While Indonesia is the largest economy in South-east Asia, Toyota Motor and its affiliate Daihatsu Motor dominate by accounting for about half of all vehicles sold, according to LMC Automotive. Including Honda Motor and Suzuki Motor, the companies have market share of about 80 per cent.

Japan's more developed car market peaked in 1996 with almost 7.3 million vehicles sold and has declined during much of the last two decades. Carmakers sold about five million vehicles in Japan last year, and foreign brands had less than 6 per cent market share.

Ford is not alone in struggling in Indonesia or Japan. Hyundai Motor and Kia Motors combined to sell fewer vehicles than Ford in Indonesia last year. Each of GM's brands also trailed Ford by registrations in Japan last year.

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A version of this article appeared in the print edition of The Straits Times on January 27, 2016, with the headline 'Ford to exit Japan, Indonesia on poor sales outlook'. Print Edition | Subscribe