Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Geneva Auto Show
    • Munich Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Europe By The Numbers
  • Car Cutaways
  • Resource Center
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: All or nothing: Why circular business models require a holistic approach
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • PUBLICIS SAPIENT: The power of post-purchase: How automakers can maximize customer lifetime value
    • TOYOTA EUROPE: Toyota Motor Europe's next-gen C-HR: sensory innovations revealed by Vehicle UX leader
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • Capgemini and Renault Group: Leaders on unlocking automotive sustainability with circular economy strategies and EV battery solutions
    • Clear Channel: The automotive industry is getting EV advertising wrong
    • SENSEAUTO: Driving the future of mobility with SenseAuto: The AGI power behind the wheel
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automotive News Europe
March 23, 2015 01:00 AM

Ford, GM take opposite strategies as Russia crisis persists

  • Tweet
  • Share
  • Share
  • Email
  • More

    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.

    RECOMMENDED FOR YOU
    EU trade chief to tell China that retaliation is a bad idea
    Recommended for You
    EU trade chief to tell China that retaliation is a bad idea
    EU trade chief to tell China that retaliation is a bad idea
    Joerg Lamparter Mercedes 2023 Eurostar
    2023 Eurostar winner Joerg Lamparter of Mercedes-Benz
    Mark Zhou Nio 2023 Eurostar
    2023 Eurostar winner Mark Zhou of Nio
    Clear channel image
    Sponsored Content: The automotive industry is getting EV advertising wrong
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Geneva Auto Show
        • Munich Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Europe By The Numbers
    • Car Cutaways
    • Resource Center
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: All or nothing: Why circular business models require a holistic approach
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • PUBLICIS SAPIENT: The power of post-purchase: How automakers can maximize customer lifetime value
        • TOYOTA EUROPE: Toyota Motor Europe's next-gen C-HR: sensory innovations revealed by Vehicle UX leader
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
        • Capgemini and Renault Group: Leaders on unlocking automotive sustainability with circular economy strategies and EV battery solutions
        • Clear Channel: The automotive industry is getting EV advertising wrong
        • SENSEAUTO: Driving the future of mobility with SenseAuto: The AGI power behind the wheel
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us