Ford admits failure in Indonesia and Japan

The Ford Ranger has had the most success in Indonesia. Source: Wikimedia

US car manufacturing giant Ford has announced it will abandon its operations in Indonesia and Japan, blaming disappointing sales and poor market conditions.

The company explained that it would cease all operations this year, as there was “no reasonable path to profitability” in either country.

Ford Indonesia would maintain services and uphold guarantees for existing vehicles in the nation, it said. An announcement regarding changes in the terms of service would be announced later, the firm said.

US rival General Motors announced last year that it would withdraw from Indonesia.

Ford sales last year accounted for only 0.1 per cent of the Japanese auto market and only 0.6 per cent in Indonesia.

Ford spokesman Neal McCarthy said: “Japan is the most closed, developed auto economy in the world, with all imported brands accounting for less than 6 per cent of Japan’s annual new car market.”

The 12-nation Trans-Pacific Partnership trade agreement would not improve Ford’s ability to compete in Japan, he added.

Industry analyst Simon Littlewood said: “It’s another step in the global defeat of the US car industry. It never really made sense for them to be in either Japan or Indonesia, selling only around 5,000 to 6,000 vehicles in each of those markets – that’s a tiny proportion of what you need to sell to have any kind of scale.

“With Indonesia you could argue that it is a substantial market with 300 million people but the problem is that the Indonesian government has a policy of insisting on local assembly,” said Littlewood.

“So Ford either had to get in, in a big way, and actually start manufacturing or to get out altogether – which is what they’ve done.”

In Indonesia the pickup and double cabin Ranger has accounted for the bulk of Ford’s sales. The pickup is sold mostly as operational equipment for commercial fleets with an 80:20 ratio between commercial and private.

Last year, Ford sold just 6,100 cars and trucks in Indonesia and 5,000 in Japan, partly blaming protective policies that favour domestic brands over imports.

Ford has 292 staff in Japan and 44 dealerships but it only employs 35 in Indonesia.

McCarthy said car sales were expected to decline in Japan due to an aging population and declining interest in car ownership among younger, urban people.