Ford Motor Company (NYSE:F) chief financial officer Bob Shanks pointed to the falling ruble and the worsening economy as factors that makes a heavy pressure on the carmaker’s market share in Russia. In an interview with German daily Handelsblatt quoted by Reuters, Hanks said that “2015 does not look good” for Ford. The company have announced a low expectations for its European operations for 2015, citing Russian financial and economic troubles as the culprit. Other carmakers have already closed shops in Russia, pressured with the same troubles.
In the face of these challenges, Shanks have ruled out the eventuality of Ford Motor Company (NYSE:F) abandoning the Russian market. According to him, the company will bolster its ability to compete by aggressively adjusting its prices in the area. He noted that Asian competitors, particularly the Japanese carmakers, are turning the weak yen to their advantage, while Koreans also want to grab more opportunities. To cut costs, Ford has laid off staff in its Russian operations in the past weeks, and it is planning to temporarily suspend operating its factories in the country by spring.
For 2015, Ford Motor Company (NYSE:F) previously expected to sustain a loss of $250 million from its European operations, but it revised that guidance and announced that the loss, although narrower than the pre-tax loss of $1.1 billion sustained in 2014, would be higher than the previous estimates on account of higher pension costs and the deeply troubled Russian market. In 2013, the company reported a loss of $1.5 billion in its European market.
Last year, auto sales in Russia, where Ford Motor Company (NYSE:F) operates a joint venture with Soller, has declined 10 percent to 2.5 million units. It was previously estimated that auto sales in the country will reach at least 4 million units per year by the end of the decade.
This article has been written by Nonito Guntan.