Ford To Exit Russian Passenger Car Market

Ford Motor Co’s Russian joint venture Ford Sollers will close two assembly plants and an engine factory in Russia, exiting the country’s passenger vehicle market. The move is part of a restructuring that will see Russia’s Sollers assume control of the venture, which is currently led by the U.S. automaker, the companies said in a statement on Wednesday. Industry sources told Reuters this month that Ford was considering closing Russian plants as it was reviewing operations in unprofitable regions.

The U.S. carmaker said the closures would lead to “significant” job losses, without giving details. A restructured Ford Sollers will focus on commercial vehicles, while passenger vehicle production will cease by the end of June, the companies said.

“The new Ford Sollers structure supports Ford’s global redesign strategy to expand our leadership in commercial vehicles and to grow the business in Europe in those market segments that offer better returns on invested capital,” Steven Armstrong, president, Ford of Europe, said in the statement.

Ford was the first international carmaker to launch vehicle assembly in Russia, opening a plant in St Petersburg in 2002. In 2011, it set up a joint venture with Sollers in which Ford and Sollers each hold a 50 percent stake, but Ford has controlled the business since buying up preferred shares.

Sales of new cars in Russia are expected to rise 3.6 percent this year, marking a slowdown from last year, according to an estimate from the Association of European Businesses lobby group.

“The Russian passenger vehicle market has been under significant pressure in recent years, with recovery slower than expected and a shift to lower-priced passenger vehicle segments,” Ford said.