Economy, Auto

Ford Turns a Profit in Russia

Ford Turns a Profit in RussiaFord Turns a Profit in Russia

Ford has become the first major foreign carmaker in Russia to see sales grow after three bad years, potentially vindicating its decision to double down on a notoriously volatile market when rivals decided to cut and run.

Sales of cars in Russia have fallen by more than half since a 2012 peak of 2.9 million vehicles, due to an economic crisis brought on by low oil prices and western sanctions. The market fell by 11% last year, and was down a further 5% in January from a year earlier, Reuters reported on February 20.

Ford's big US rival General Motors pulled out of Russia two years ago. But Ford chose not only to stay, but to keep investing, launching new models with modifications designed to suit the country's harsh driving conditions.

Since 2011, its joint venture with Sollers, a Russian partner, the two have ploughed $1.5 billion into making cars locally to local specifications.

Now Ford's sales have turned a corner and rose 10% last year, an achievement the company says is proof its strategy is at last paying off.

The 40,000 Fords sold in Russia last year are still barely more than a fifth of the almost 190,000 vehicles the company sold in 2008, before the global financial crisis brought the first of two collapses in the Russian car industry in less than a decade.

During the latest crisis, Ford's share of the market for foreign cars fell at the expense of Korean competitors Kia and Hyundai, which chose to shore up market share through aggressive pricing. But now their sales are still falling, while Ford's are on the rise.

New models, such as the Fiesta hatchback and EcoSport SUV, have been adapted for Russian conditions of bad roads and extreme cold, with higher ground clearance, anti-corrosion finishes and engines adapted for lower grade fuel.

Even at such small numbers, sales growth in Russia would mark a bright spot for Ford's European operations after it warned last month that the impact of Britain's vote to leave the EU would put a $600 million dent in its 2017 earnings.

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