Ford Sollers to shut down plants in Russia, stop imports

Ford Sollers to shut down plants in Russia, stop imports
The Ford Sollers joint venture will stop the production of Ford-branded cars in Russia and downsize its staff in June / wiki
By bne IntelliNews March 27, 2019

Ford Sollers, a joint venture of Ford car major and car assembler Sollers, will stop the production of Ford-branded cars in Russia and downsize its staff, the company said on March 27. Ford will also stop importing its vehicles to Russia.

By the end of June 2019 the JV will shut down two plants in Vsevolozhsk and Naberezhnye Chelni, as well as an engine plant in Elaburg and Tatarstan. The workers will be downsized on a "voluntary resignation program with payment of additional compensations," the company employing 3,700 people said as cited by Reuters.

After the restructuring, Ford Sollers will only focus on assembling and selling its Light Commercial Vehicle (LCV) model Ford Transit on the Elabrug plant and the sales of the model. Sollers will gain control in the JV with 51% stake.

Vedomosti daily reminds that Ford was the first foreign car major that has built a full-cycle car production chain in Russia with the launch of Ford Focus plant in Vsevolozhsk in 2002. Reportedly, in 2014-2016 Ford Sollers was loss making and could not cope with the market plunge.

After nearly five years of contraction, the sale of new cars grew for the second year in a row in 2018. In 2017, the new car market grew by 12%, and in 2018 by 13% to 1.8mn vehicles. However, latest February sales numbers questioned the sustainability of the positive trend on the car market.

In the meantime, some foreign companies managed to sit the market decline out. Russia's largest carmaker Avtovaz and Renault-Nissan-Mitsubishi plan to strike a RUB70bn ($1.1bn) investment deal for 10 years in Russia, the companies said in the end of 2018.

Renault-Nissan is the largest shareholder in Avtovaz, together with Russian state technology agency Rostec. Since autumn 2018 Rostec and Renault Nissan seek to consolidate 100% in Avtovaz. In April Avtovaz completed the second stage of a $1bn recapitalization by the French car major and Rostec, which brought their joint stake in the company to 83.5%. 

 

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