Under Mark Fields, Ford has been taking a more discriminating approach to costs. It also said recently that it will not be present with a stand at this years Paris Motor Show, but did exhibit at last months Barcelona Mobile World Congress as well as CES in January

Under Mark Fields, Ford has been taking a more discriminating approach to costs. It also said recently that it will not be present with a stand at this year's Paris Motor Show, but did exhibit at last month's Barcelona Mobile World Congress as well as CES in January

Ford's decision in January to pull out of Japan and Indonesia, two major automotive markets in Asia, by the end of the year took the rest of the automotive industry by surprise.

The news follows an announcement by General Motors almost a year ago to cease production in Indonesia just two years after it reopened an assembly plant it had shut down eight years previously. GM also cut back its model range at its Thai operations, which also feed other markets in South East Asia.

In both Japan and Indonesia Ford has no local production – it relies entirely on imports. In Japan, the brand's 52 sales outlets sold around 5,000 vehicles last year – equivalent to 0.001% of a market which exceeded 5 million units last year.  To achieve this it employed around 292 people at the time of the announcement.

In Indonesia it fared only slightly better last year. It sold close to 6,000 vehicles – equivalent to less than 0.6% of the vehicle market. It directly employed just 35 people at the end of last year, however, according to local reports.

Compared with its operations in the US, Europe and China, this is a drop in the ocean. Ford sales rose to a ten-year high in the US last year to 2.7 million units; while in Europe its sales exceeded 1.2 million units; and in China more than 1.1 million units.

Other key markets for Ford include Brazil, where it sold 250,000 units and India with 177,000 units.

With these numbers in mind, it is not unreasonable accept that Ford may well wish to focus on more promising markets in Asia, such as China - particularly with local brands fighting back fiercely for market share.

In Japan, the sluggish economy and deteriorating demographics means that overall growth potential in the short-, medium- and long-term is not significant. Furthermore, the cost of sale is high and the market is extremely competitive. Japanese brands account for around 90% of the total market.

While in Indonesia the automotive market's short-term growth prospects have been hurt by the sluggish economy and depressed commodity prices, the medium- and long-term growth prospects are good. The market here, like in all countries in South-East Asia, is also dominated by the Japanese – which account for around 90% of sales. The Japanese have built their presence in South-East Asia over a long period, through long-term and continuous commitment rather than short-term priorities, including earnings.

The Japanese will tell you that building trust and brand equity takes time. The ability to offer affordable aftermarket services are also key factors for success, as are residual vehicle values.

Toyota goes further, believing that they are an integral part of the region's long-term economic development and that growth and investment between developing markets in South-East Asia needs to be balanced. 

To the local consumers, it really looks like both Ford and GM have thrown in the towel in these markets when the going got tough, rather than showing long-term commitment. It also looks like they have accepted that Japanese dominance here is unassailable and that the likes of Toyota can count on unchallenged future growth in these parts of Asia. Ford, however, will say that the key to profitability is to sell in the right markets with the right products. After years of trying, Japan and Indonesia have been deemed an uphill struggle. Better to quit than perservere with slim chances of turning a good profit on a reasonable timescale. They have been sacrificed so that the company can focus resources and effort on more profitable opportunities elsewhere.