GENEVA: Ford adjusting to Russia challenges - Farley
Jim Farley at Geneva, his first Geneva Show since moving to the top job in Europe
Ford of Europe chief Jim Farley has told just-auto that he is confident in Russia's long-term market potential despite the company having to deal with current problems impacting the automotive sector there.
Speaking at the Geneva Show, Farley said that Ford is taking action to deal with the challenges in Russia.
"Russia is a very volatile and dynamic situation," he said. "Last year was around 2.5m units, making it one of the top three markets in Europe. This year we see the market shrinking by 20-30%. January was supporting carry over product and also some pricing and scrappage programme effects...so maybe January was a little higher than it otherwise would be, but we saw some market challenges in February."
Ford has taken action to cut output as car demand has shrunk and the Russian economy feels the adverse impact of lower energy prices as well as knocks to confidence caused by Western sanctions that have followed the crisis in Ukraine.
Farley maintains that Ford is on top of the evolving situation in Russia. "We have been very aggressive in dealing with the situation. We're down to one shift in St Petersburg and Elabuga. We have taken some actions on the people side and we have cut a lot of our cost."
That said, he also points out that there remains a positive opportunity for Ford in Russia. ""We are still investing in our new products. For us, we're in a bit of an unusual situation in that we are just finishing an entire refresh of our line-up and localising not only the products, but also engines. And the reason why is that we still feel this is going to be a key market down the road. We see Russia as a very important long-term opportunity, but in the meantime we are dealing with reality and adjusting - for example in pricing to deal with inflation."
Localisation is being encouraged by the Russian government's auto industry policy framework ('Decree 166') which sets out local content and volume stipulations for foreign automotive enterprises partnered with local firms.
"We have done a lot on localisation and it's been a lot of hard work by the team," says Farley.
"Working with [local partner] Sollers we were able to meet our localisation requirements last year, which were really challenging."