Decreased sales and tight government restrictions cited as culprits

Ford Motor Company has announced to its dealership networks in Japan and Indonesia that it will cease operations by the end of 2016, the Associated Press reports. This comes as slumping sales and tight government restrictions lead to 2015 being the driest year for Ford in recent memory. The U.S. automaker sold a mere 11,614 units in both countries.

Despite being the third largest auto market, Japan only purchased 5,000 Ford cars in 2015. However, Ford isn’t the only automaker with slow sales in Japan. Imported vehicles account for only six percent of new car sales. This move to end operations in the country will end a 40-year relationship and eventually close the 52 dealerships in operation. Ford has promised to continue honoring warranties and services for Ford owners.

Much of the same can be said for the island nation of Indonesia. Ford only sold 6,103 new vehicles there in all of 2015. In both counties, Japanese vehicles reign supreme in sales. Ford spokesman Neal McCarthy said of the situation, “It has become clear that there is no path to sustained profitability, nor will there be an acceptable return over time from our investments in Japan or Indonesia.”

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Why It Matters

Though this does appear to be rough times for Ford, it actually shows the automaker is thinking wisely about how it spends its resources. I imagine profits margins for 5,000 vehicles become extremely small (or likely non-existent) after paying the shipping bill and keeping Japan’s 52 dealerships running. Ford will now keep its focus on China, the U.S., Europe, and other regions around the world whose population is hungry for new vehicles. It’s a sad story on its surface, but Ford will be stronger and better for making the cuts.

Source: Motor Trend

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