Brazil has cost Ford Motor BRL61bn reais ($11.6bn) in the past decade, Reuters reported.
The blue oval brand announced closure of its Brazilian manufacturing plants in January, affecting 5,000 workers and almost 300 dealerships.
Previously unreported corporate filings in Sao Paulo state cited by Reuters showed Ford had burned through $7.8bn, the bulk in accumulated losses but also some cash injections.
Add to that the $4.1bn that Ford will shell out to extricate itself from its commitments, and the price tag for the Brazilian operation rises to almost $12bn, Reuters said.
Almost all the losses and cash injections were in the past eight years, when the company has lost about $2,000 for every car it sold, Reuters calculations based on the filings and sales data indicated.
Ford, which does not separate out Brazil from South America in its financial results, declined to comment to Reuters on the losses, cash injections and calculations.
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The COVID-19 pandemic had strained finances while Ford’s problems also reflect, in part, a strategic misstep that saw it lag rivals in transforming its lineup of unprofitable compact cars into higher-margin SUVs, a half dozen sources familiar with the company’s Brazilian operation told Reuters.
Ford had in fact drafted a plan to shift into SUVs, larger cars with higher profit margins, but was too slow to implement it, they said.
“There were no other viable options,” Lyle Watters, Ford’s head for South America, told Reuters in a statement about the decision to exit the country.
Watters, who will start a new Ford role in China in July, cited an “unfavorable economic environment, lower vehicle demand (and) higher industry idle capacity” for the Brazil retreat.
He declined to comment on the SUV project, saying he would not “speculate on new product plans”.
A Ford spokesman in Brazil told Reuters the company was implementing “a lean and asset-light business model in the region, with a truly customer-centric mindset”.
Reuters noted Brazil was largely a loss maker for global car companies, despite the government providing federal subsidies totaling $8bn over the past decade and a 35% import tariff to shield local production.
Domestic costs are high. Even though local factories can make 5m cars a year, more than double the number sold in the country, exports are minimal because prices are uncompetitive. And it costs automakers money to keep factories open while operating at low capacity.
Mexico, by contrast, exports more than 80% of the cars it makes, helped by free-trade agreements with the United States and Canada, making it an attractive alternative for the same carmakers that already operate in Brazil.
A 2019 study by consultant PwC found that selling a Mexican-made car in Brazil was 12% cheaper for an automaker than selling a locally-made vehicle, including production, tax and logistics costs, Reuters said.