Ford Exits Indonesian and Japanese Market

The declining sales urge the America's top manufacturer to shut down its operations before incurring more losses

America’s top automobile manufacturer, Ford Motor Co. announces its exit from the Japan and Indonesian markets. The U.S. auto giant will exit the markets by the end of 2016. The U.S. based organization faces tough competition in the Asian markets. Dejected by the unprofitable ventures, it has decided to suspend its operations. The decision has been communicated to 350 employees of the company in both countries.

Over the years, Ford’s executives complained about the hindrances that importers were facing including non-tariff barriers and a series of regulations. Trade-barriers were huge blow for the company for the sector where the company relied on importing the vehicles. The organization does not positive views for  U.S. President Barack Obama’s 12-Nation Trans Pacific Partnership Trade, a treaty which would disband the U.S. duties on import cars from 12-Nations including Japan.    

The Japanese market is already dominated by big local companies such as Toyota Motor Corporation. In 2015, the company’s sale has been exceptionally low with a total of around 11,000 vehicles sold in both countries. In Japan, the U.S. top automobile manufacturer share remained at 0.1% with a number of only 5,000 vehicles sold.

According to analysts, trend of declining sales in Japan is inevitable because of shrinking population and lack of interest of the youngsters in cars trimming any possible chances of Ford’s success. Similarly, in Indonesia, Ford Motor managed to sale only 6,100 vehicles covering 0.6% share in the market.

The automobile organization has been operating in Japan for more than four decades with 52 dealerships in the country. The company’s personnel said that the company’s operations in Asia will remain in force. Lately, it has been performing quite at par in China. According to Ford’s spoke person, Ms. Karen Hampton, last year the company pulled off $1 billion sales in China, growing up by 3%.

 The business objective included import of Ford and Lincoln vehicles, sales, and dealership offices. The company didn’t set up production base in Indonesia. Moreover, Indonesia has the potential for the automobile industry’s growth. However, the tough competition by Japan deterred the company’s growth. Worldwide, Japan has the most developed automobile manufacturing structure.

In the year 2014, the company sold around 11,614 vehicles in Indonesia while in the foregoing year the figure came tumbling down at 6,100. The sales declined by almost 50%. Almost a year earlier, in Indonesia, the Detroit multinational General Motors Company shut down its assembly plan.

Keeping in view Ford’s poor performance in both countries, the company’s decision to shut down the businesses is prudent.   

At the market which closed on Monday, Ford Motor Corp. stock stood at $11.98. The stock currently has a rating of “Hold” with a 52-week range of $10.44 to $16.74. The higher price target is estimated at $22 while the lower price target is set at $14.