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Ford ends manufacturing in Brazil


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I predicted Ford will pull the plug on Brazil a while back. Ford would rather be a niche player in Brazil than try to compete with Hyundai or Toyota which are gobbling up Ford's market share. Nevermind competing with VW, FCA, and GM which are all much better run operations.

 

This also throws the future of Figo and EcoSport in complete doubt. With Ford becoming a niche player, there is no need to replace either model. And without the volume needed in South America, Ford is definitely not going to keep making either model in India either. 

 

Ford's emerging market strategy seems to be cut bait and get out of Hyundai's way. 

 

Edit: the article mentions Ford making vehicle in Uruguay? This is news to me.

 

Edited by bzcat
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17 minutes ago, bzcat said:

I predicted Ford will pull the plug on Brazil a while back. Ford would rather be a niche player in Brazil than try to compete with Hyundai or Toyota which are gobbling up Ford's market share. Nevermind competing with VW, FCA, and GM which are all much better run operations.

 

This also throws the future of Figo and EcoSport in complete doubt. With Ford becoming a niche player, there is no need to replace either model. And without the volume needed in South America, Ford is definitely not going to keep making either model in India either. 

 

Ford's emerging market strategy seems to be cut bait and get out of Hyundai's way. 

 

Edit: the article mentions Ford making vehicle in Uruguay? This is news to me.

 

Kia and Hyundai are gobbling up market share from Ford everywhere except pickups/Van's. That's what makes Bronco family so important with those two Korean juggernauts not able to compete just yet. 

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Goodbye Troller...?

 

4 hours ago, bzcat said:

I predicted Ford will pull the plug on Brazil a while back. Ford would rather be a niche player in Brazil than try to compete with Hyundai or Toyota which are gobbling up Ford's market share. Nevermind competing with VW, FCA, and GM which are all much better run operations.

 

This also throws the future of Figo and EcoSport in complete doubt. With Ford becoming a niche player, there is no need to replace either model. And without the volume needed in South America, Ford is definitely not going to keep making either model in India either. 

 

Ford's emerging market strategy seems to be cut bait and get out of Hyundai's way. 

 

Edit: the article mentions Ford making vehicle in Uruguay? This is news to me.

 

 

Transit is starting production in Uruguay next year.

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On 1/11/2021 at 10:26 PM, Rodrigo said:

sad news for the region, now ford is going to sell very little, 

 

 

Very sad news for employees and buyers who believed in the brand.

 

Here in Brazil, their life is getting more complicated. If it was hard being the 4th largest automaker here, now as an importer with poor track record and expensive portfolio, they will drop to an unsustainable market share. Last year the defunct plant where Ka and EcoSport are made sold more than Jeep as a whole brand here - meanwhile FCA crossovers are thriving, with production in a neighbour state.  Just for a price comparison, local Trollers cost less than half the price of a Wrangler and a Bronco, and the local Ecosports are sold for half of the crappy Territory. And Powershift technology is still a very vivid memory. Nobody is going to pay those prices for a company that keeps exiting the market and leaving customers to their luck.

 

I always recognise that business environment is bad in this country, but FCA is investing ($14bi through 2024), and so are GM - 9m, oops - ($10bi), VW ($2 bi,in the next couple of years), and Toyota ($ 1bi, in 2021).

Meanwhile, Ford is spending $4 bi just to end operations, instead of bringing new products; no new projects for the last 5 years or more... One needs to invest money before one makes money...

 

And, if I'm not mistaken, by Mercosul rules, they won't even be able to bring Rangers from Argentina or Transits from Uruguay without paying taxes, since they are no longer a local manufacturer. Investments in neighbouring countries don't seem to make much sense if they cannot access the largest regional market. This could pose serious challenges to production in those countries as well. Maybe the trade agreement between Brazil and Mexico is not so restrictive; because if they are, Bronco Sport and Maverick are going to fail here as well, especially with no Diesel engine. I know these will be very successful in the US, I just don't get why bringing them to Brazil, they should just close all operations: the way they are doing, they will just lose more and more money, and then blame local conditions.

 

I hope Ford's strategy of dismissing emerging markets (Russia, India, Brazil...) doesn't make the company too small and vulnerable in a time of consolidation.

As for myself - and many of you will agree, I'm sure - buying products that don't add to the local economy is out the question, so maybe a Jeep or a VW next time I  go shopping... definitely not a Ford.

 

Edited by passis
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South América is a money pit partially because of bad admin. In fact, one has to be a little incompetent to lose so much money being the 4th largest in the region with 10% of the market. No hopes for Índia and China where Ford is irrelevant. Maybe they can make it work in Europe, where big conglomerates dominate the landscape...

 

And I may have misread the news but Ford South America is still up and running... Losing $4.1 billion dollars in 2021 because of yesterday's decision... Trust me, they will keep losing money for many years to come, as long as they are here making stupid decisons. This one will only maximize losses here. Another example of bad admin.

 

As for Wall Street, wouldn't they just love it if Ford became the North American arm of Volkswagen?

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14 hours ago, mackinaw said:

South America has been a money pit for years.  Quarter in, quarter out, it loses money.  As expected, Wall Street loved what Ford did.  Ford stock was up while the rest of the market was down.

 

That's a Ford problem, not a South America problem.

 

Ford is also the only car company that lost money in China when everyone did great.

 

Some of you may think that these emerging markets are not important but Ford is also shrinking rapidly in Europe. Ford used to be the top 3 seller in Germany, Belgium, Spain, Italy, Sweden, Netherlands, France, and UK - together basically 80% of European market. Ford is a top 3 seller in exactly 0 of those markets now. Ford Europe is on the same trajectory as Ford APAC and Ford South America... For such a high fixed cost business as auto making, once you pull back on one part of your business in a particular market, then the math favors continue pulling back until you exit that market. What's the endgame for Ford? Just sell trucks in North America?  I don't get it. 

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7 minutes ago, bzcat said:

 

Ese es un problema de Ford, no de América del Sur.

 

Ford es también la única compañía de automóviles que perdió dinero en China cuando todos lo hicieron muy bien.

 

Algunos de ustedes pueden pensar que estos mercados emergentes no son importantes, pero Ford también se está reduciendo rápidamente en Europa. Ford solía ser el top 3 de ventas en Alemania, Bélgica, España, Italia, Suecia, Países Bajos, Francia y Reino Unido, juntos básicamente el 80% del mercado europeo. Ford es uno de los tres principales vendedores en exactamente 0 de esos mercados ahora. Ford Europa está en la misma trayectoria que Ford APAC y Ford Sudamérica ... Para un negocio de costos fijos tan alto como la fabricación de automóviles, una vez que retrocede en una parte de su negocio en un mercado en particular, los favores matemáticos continúan retrocediendo hasta que salga de ese mercado. ¿Cuál es el final del juego para Ford? ¿Solo vende camiones en Norteamérica? No lo entiendo. 

i do not understand either. Renault, Peugeot, Toyota, Fiat, Nissan, Honda, General Motors, VW, they invest heavily in the region, but Ford leaves.

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7 minutes ago, bzcat said:

What's the endgame for Ford? Just sell trucks in North America? 

 

That's the way things seem to be going at Ford. Maybe Ford will spin off its operations into these separate companies?

  • F-Series - North America focused
  • All other trucks and vans (Ranger, Transit, etc.) - global
  • Mustang (all variants)  - global
  • Smart Mobility - global
  • Ford Credit - global
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Unfortunately this decision sends a clear message that regional operations can indeed close in a blink of an eye. Since India*, China and Europe are also underperforming, Ford might end up restricted to North America, which is clearly unsustainable, considering global scale competition. And consumers outside NA might think twice before purchasing a Ford. I understand the company needs adjustment but to me they have chosen a downward spiral path.

 

I also don't get why they didn't have capital to allocate to developing projects in emerging markets 5 years ago - in order to avoid a completely obsolete line up - but they seem to have plenty of it ($4.1 bi, more than a third of the $11 bi restructure plan) to drag money into an import operation that is bound to failure. Why on Earth would one spend so much cash to make more losses?

 

* I have a feeling that the Mahindra divorce announces the end of Indian operations, they are probably looking for buyers for the plants...

Edited by passis
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1 hour ago, bzcat said:

That's a Ford problem, not a South America problem.

 

No argument from me, but Ford decided to pull a GM and just exit a market (like GM did in Europe and India) instead of spending millions (billions?) to become competitive.  Automotive 2.0 (EV's and AV's) is coming, and it will take a lot of $$$$$ to fund this new technology.  Ford, and others, would rather spend their money on this.

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2 minutes ago, mackinaw said:

 

No argument from me, but Ford decided to pull a GM and just exit a market (like GM did in Europe and India) instead of spending millions (billions?) to become competitive.  Automotive 2.0 (EV's and AV's) is coming, and it will take a lot of $$$$$ to fund this new technology.  Ford, and others, would rather spend their money on this.

 

GM re-entered India in 2020 and they are doing fine, so far. They are selling their Baojun SUVs in India under the borrowed MG brand from its chinese partner SAIC.

 

GM also has very well run operations in China and South America. Ford seems to have just basketcases. It's kind of interesting to watch Ford struggle in places where it should have no problem competing. 

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On 1/12/2021 at 6:18 AM, passis said:

South América is a money pit partially because of bad admin. In fact, one has to be a little incompetent to lose so much money being the 4th largest in the region with 10% of the market. No hopes for Índia and China where Ford is irrelevant. Maybe they can make it work in Europe, where big conglomerates dominate the landscape...

 

And I may have misread the news but Ford South America is still up and running... Losing $4.1 billion dollars in 2021 because of yesterday's decision... Trust me, they will keep losing money for many years to come, as long as they are here making stupid decisons. This one will only maximize losses here. Another example of bad admin.

 

As for Wall Street, wouldn't they just love it if Ford became the North American arm of Volkswagen?

Why does it cost $4 billion to exit a country and close factories?  You turn off the lights, lock the doors, and go home!  The rest is financial baloney!

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24 minutes ago, Joe771476 said:

Why does it cost $4 billion to exit a country and close factories?  You turn off the lights, lock the doors, and go home!  The rest is financial baloney!

 

It surely does sound like an absurd ammount, especially if you consider they spent $1.9bi to build Camaçari. And FCA runs a very similar plant and makes a lot of profit.

 

Maybe they are doing some creative accounting, diverting losses from one region to another...

 

But Ford management seems to have forgotten that the closing process also envolves: returning enormous fiscal incentives, subsidised loans, breaking of medium term contracts with suppliers, dealers and employees, not to mention PowerShift legal actions that now seem to require deposit payment to courts.

 

I wonder if finalizing the new Ecosport (whose development was almost done and paid for) and making a couple of variations would cost more (financially and emotionally)... Hard to believe, but Mr Watters knows best...

 

 

 

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15 minutes ago, Joe771476 said:

Why does it cost $4 billion to exit a country and close factories?  You turn off the lights, lock the doors, and go home!  The rest is financial baloney!

 

No baloney Joe771476 sir. Restructuring charges both cash and non-cash are actual expenses that impact net income even though they are nonrecurring and unusual in nature. 

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3 hours ago, Joe771476 said:

Why does it cost $4 billion to exit a country and close factories?  You turn off the lights, lock the doors, and go home!  The rest is financial baloney!


Break leases, write off assets, severance pay, moving costs.  It adds up.

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