Ford passenger car production will discontinue in Russia by the end of June

Ford passenger car production will discontinue in Russia by the end of June


 

RusAutoNewsCom.- As reported by the company press office, the shareholders of Ford Sollers joint venture: Ford Motor Company and Sollers have come to an agreement and signed a protocol on the restructuring of the joint venture, the operations of which will concentrate on the LCV segment in the future. The company will strengthen its position and increase the sales of Ford Transit, which will be manufactured at the factory in Alabuga SEZ, through its new business structure. The sales of Transit have risen by 200% in the last three years, which made the model the segment leader amongst foreign brands.

The memorandum of understanding has been signed following a review of the joint venture’s strategy by the shareholders. The need to return to profitability in the short-term and to increase the efficiency of investment in the face of difficult market situations are the purposes of the changes. The negotiations continue between the shareholders and a final agreement will be reached within the forthcoming months.

“The decision is an important step towards increasing the efficiency and competitiveness of Ford, in the interest of all our partners” – said Steven Armstrong, the Executive Vice-President of Ford Motor Company in Europe, the Middle-East and African countries. “The new structure of Ford Sollers corresponds with our strategy on the strengthening of the leadership of Ford brand in the segment of commercial transport in all European markets, as well as expressing our intention to take complicated decisions and leave unprofitable segments, such as the Russian car market” – he concluded.

The shareholders of Ford Motor Company and Sollers remain as partners in the new structure of Ford Sollers, 51% share of the  joint venture’s authorised capital belonging to Sollers.

“We are in the threshold of a new stage in the long-term partnership with Ford in Russia” – said Vadim Shvetsov, the general director of Sollers. “We are sure that the concentration of the business in the LCV segment will allow the joint venture to increase efficiency and lay a strong foundation for future growth” – Shvetsov added.

The restructuring of business proposes the end of car production by the end of June 2019, to be followed by the closure of two car factories of Ford Sollers in Naberezhnye Chelny and Vsevolozhsk, alongside the engine plant in Alabuga. The measures will lead to a significant reduction in staff, who will primarily be put under a voluntary dismissal programme with the payment of additional compensation.

Ford Sollers continue the negotiations with its partners concerning the future actions, necessary for the implementation of the restructuring of the business.

“The decision we will announce today is a complicated one, however, necessary to ensure the competitiveness of Ford Sollers in long-term. Ford Sollers and the special version range based on the model are the leaders of the segment amongst foreign brands and have a great potential in further strengthening of position in the Russian market in the future” – said Adil Shirinov, the CEO and chairman of Ford Sollers.

Ford Sollers confirms that all warranty repairs and servicing obligations of the vehicles will be undertaken in full.

The company will pay out approximately $200 million to its workforce and partners due to the discontinuation of car production in Russia, as reported by the company press office.

“Around $200 million will be paid in cash, mainly to the staff due to dismissals and to the suppliers” – the statement says.

The company has told that the majority of the payments will be made in 2019.