Ford may be suffering just as badly from the meltdown in Russian car sales, but don't expect it to follow General Motors' lead and abandon dealers, suppliers and employees in Russia by exiting the market.
Indeed, Ford's approach is almost the polar opposite of GM's handling of its Russian operations. Ford is deepening ties to the country -- preferring to swallow losses in the short term in hopes of emerging from the crisis in a position to capitalize on the departure of competition such as GM's Opel.
In Russia, Ford has three key advantages over GM.
1. Ford is limiting its risks through a joint venture with Russian local partner Sollers.
2. It is reducing its reliance on imports by shifting more production to its plants in Russia, which GM failed to do.
3. The products Ford builds there are better suited than GM's to meet local demands.
"We are fully committed to our JV and we are just about to launch a lot of very relevant localized products, which is important for our ruble exposure," Ford of Europe sales chief Roelant de Waard told Automotive News this year.
Ford Sollers is launching four models in Russia this year, including the Fiesta, and will open an engine factory in Tatarstan in addition to its three vehicle plants. Altogether this allows it to meet the Russian government's target of local capacity, a hurdle that GM was not on track to achieve
Ford Sollers offers four crossovers in Russia, a body style that is popular because of the country's severe weather and challenging road conditions. Two of the crossovers are built locally -- the small EcoSport and the full-size Explorer. GM builds only the Chevrolet Cruze and Opel Astra in hatchback and sedan derivatives.
"Our position hasn't changed. We believe Russia has significant potential in the longer term," a Ford spokesman said. "We are working very intensively with our partner Sollers, really looking into every single area of the business every day to cut costs and ensure we match production at our three plants to real demand while dealing with the difficult pricing environment."
Sales for both U.S. carmakers have fallen dramatically in Russia as price hikes to offset a collapse in the ruble severely cost them market share. Chevrolet sales plunged 71 percent to just 6,300 vehicles in the first two months while Opel's sales volumes fell 82 percent to fewer than 2,000 vehicles. The market was barely kinder to Ford, which notched a 70 percent drop to around 3,200 vehicles.
Both U.S. carmakers have cited Russia as a key risk to their profitability targets for their European operations, with GM reshuffling management in Russia last September and Ford lowering its 2015 guidance for the region in January.
But GM blinked first. Last week it announced it would all but pull the plug on its operations there.
Opel will exit the market, and GM will abandon production at its plant in St. Petersburg by year end. GM will scale back its presence in Russia, selling "iconic" U.S.-built models such as the Chevrolet Corvette and Cadillac Escalade. It will mean GM will go from less than 200,000 sales among Chevy, Opel and Cadillac to likely just 2,000.
GM, the first major carmaker to back out of Russia, is prioritizing meeting its 2016 breakeven target for Europe over a long-term stake in a strategic growth market.
Last year overall sales in Russia amounted to 2.5 million vehicles, the seventh-largest market in the world and one that is widely expected to eventually surpass Germany.
"To give up on a major market with your volume brands is extraordinary really and a pretty drastic step," said IHS Automotive analyst Tim Urquhart.
Still, industry analysts largely applauded the move because it avoids the need to invest heavily in fresh production capacity to meet localization targets.
"This demonstrated a new decisiveness at management and showed us a different side of GM that we've historically not seen, when it would form committees and hire consultants while losses would fester," said Brian Johnson of Barclays.
For Ford it's also good news. Last week, the company said it would offer a trade-in bonus for customers of brands leaving Russia, while telling dealers abandoned by GM that it was looking to expand its retail network and would be open to cooperation.
