US automaker Ford has said it will exit Japan and Indonesia citing difficult market conditions and low sales.
Ford To Stop Operations in Japan and Indonesia Due To Low Sales
The carmaker announced that it would halt all operations this year as the Japanese and Indonesian markets did not offer any feasible signs of profitability.
Last year, rival firm General Motors said it would exit Indonesia.
In Japan, Ford sales accounted for just 0.1% while in Indonesia total sales accounted for 0.6% in 2015.
Neal McCarthy, Ford Spokesperson said, “Japan is one of the most developed auto markets in the world but it is also the most closed. All the imported car brands account for less than 6% of the new car market sales annually.”
He added that the Trans Pacific Partnership trade agreement involving 12 countries in the region makes it even more difficult for Ford to compete in Japan.
Yet another setback
Analysts see this move by Ford as another blow to the US auto-manufacturing industry.
In both Japan and Indonesia, Ford was selling just 5 to 6000 new vehicles annually. This is a very small proportion of what any firm would need to sell to realize tangible profits.
It may look as though with 300 million people Indonesia would be a lucrative market. However, the government there has policies that strictly favor local assembly, according to analysts.
The only option for Ford was to capture the market in a big way and to start local manufacturing or to exit the market completely—they did the latter.
In 2015, Ford sold only 6,1000 trucks and cars in Indonesia and about 5,000 in Japan while pointing fingers at the respective governments for policies that undermine imported car brands but favor local brands.
In Japan, Ford has up to 44 dealerships and employs 292 workers while it employs just 35 workers in Indonesia.