By on June 27, 2016

2015-Ford-Focus-07

Indonesia is the biggest vehicle market in Southeast Asia, and Ford Motor Company is running away from it.

The automaker’s announcement earlier this year that it plans to stop selling vehicles in the country came as a shock to dealers, who now want Ford to compensate them in a big way, Reuters reports.

Six businesses that oversee 31 dealers (representing 85 percent of the country’s Ford sales) now want $75 million from the automaker, and they’re willing to sue if they don’t get their settlement. According to the dealers’ lawyer, Harry Ponto, the dealers made large investments in new showrooms in order to support Ford’s expansion plan.

Ponto told Reuters, “This is something that was done unilaterally and was unfair for the Indonesian partners. It’s an action that is beneath an international brand like Ford.”

In 2011, Ford announced a strategy to grow its market share in the region. Five years later, its products amount to less than one percent of Indonesia’s new vehicle sales, and the automaker wants to pull up stakes — including imports and sales — by the end of the year. Under the new plan, existing Ford owners will still be able to have their vehicles serviced.

The reason for the cut-and-run, according to Ford, is simple economics. A spokesperson told Reuters that the company couldn’t find a way to stay profitable “after pursuing every possible option.”

One dealer, PT Kreasi Auto Kencana, invested $380 million in materials and personnel to support the expansion. After the company announced the pullout, the dealer realized there was no clause in its contract for what would happen if the automaker left the market.

Indonesia isn’t the only market Ford said “nah, never mind” to. It also plans to pull out of Japan by the end of the year.

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14 Comments on “After Ford Calls it Quits In Indonesia, Dealers Tell Company to Pay Up...”


  • avatar

    I know a Lincoln dealer that Ford approached and forced him to build a new dealership and move to it. Apparently their contracts with the dealers can force them to make a major investment like that. So good on ya dealers. I’m guessing they’ve got some compensation coming, Ford willing or not.

    • 0 avatar
      SCE to AUX

      Agreed. And I’m sure Fiat USA dealers will be watching this case with great interest.

    • 0 avatar
      makuribu

      My Subaru dealer was told to build a big glass showroom in a nicer part of town. He looked at his numbers and told Subaru to piss off. He still services a lot of Subarus, including mine, because he has 30 years of experience and many people who like him better than the new place that’s trying to pay its mortgage.
      And now that he’s an independent garage his rates are lower and I can get him to install aftermarket parts.

  • avatar
    larrystew

    I wonder if it has anything to do with Fiesta and Focus owners’ dissatisfaction rate with the Powershift transmission. Maybe the word has gotten around.

  • avatar
    TDIGuy

    Curious, if Ford sales are so bad for long enough that they are pulling out, what are the top selling brands in Indonesia?

    • 0 avatar
      dukeisduke

      This article has the top selling 20 models for May:

      http://bestsellingcarsblog.com/2016/06/indonesia-may-2016-toyota-avanza-daihatsu-xenia-back-at-the-helm/

      Looks like it’s all Japanese makes: Toyota, Daihatsu, Nissan, Honda, Suzuki.

      • 0 avatar
        RobertRyan

        Japanese dominate. In South East Asia, Japanese and Korean.in Australia.Ford has slipped to 5th so far in Australia, it has been 2nd for many years. Quality of the imported non Thai built vehicles, not brilliant

  • avatar
    TMA1

    That’s surprising, I’ve seen a lot of Fords in China and SE Asia. But politics can be pretty crooked in Indonesia, and there’s a huge disparity between the rich and poor.

    The US-market Fiesta will soon be coming from Thailand, so they are obviously keeping a presence in the region. Not enough buyers for all those Thai Fiestas though?

  • avatar
    Big Al from Oz

    Indonesia would be a tough market. The country is still developing and it’s GDP isn’t that high.

    The other problem Ford has is Toyota. Toyota in SE Asia is very big.

    Ford didn’t have the correct vehicles at the right price and/or even reliability isn’t good enough either.

    I don’t even know if Ford even manufacture vehicles to suit Indoneasia. Maybe an Indian manufacturer would do better, or Ford should attempt to set up shop in India, which would be awkward as well, still. India is still a very insular market, even with the market liberalisation that’s been occurring since Modi has taken over.

  • avatar
    05lgt

    I’m a lot ignorant of contract law, even in my own country, but… Do these dealers have any more standing to sue Ford if there was no protection from Ford calling it quits in the agreement than if Ford were to sue the dealers for failure to move the cars? I’m pretty sure Ford invested a sizeable amount into Indonesian sales too; what (other than local courts) makes the dealers immune to risk in the arrangement?

  • avatar
    Kenmore

    Maybe an American brand is haram there. Did McDonald’s or Levis catch on? Apple must have.


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