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July 25, 2016

Indonesian dealers claim compensation as Ford pulls out

Ford dealers in Indonesia are demanding compensation following the carmaker's announcement earlier this year to exit the market by the end of 2016, according to local reports.

Ford dealers in Indonesia are demanding compensation following the carmaker's announcement earlier this year to exit the market by the end of 2016, according to local reports.

Lawyers representing 31 dealers which accounted for roughly 80-85% of Ford's sales in the country last year are reportedly demanding IDR1 trillion (US$76m) in compensation for lost investments and to compensate around 2,000 laid off employees.

The lost investment was calculated at between IDR20-30bn (US$1.3-$2.3m) per dealer. Ford's dealerships in the country are typically large '3S' [sales, service and spare parts – ed] outlets covering wide areas.

Lawyers representing the dealers said they sent notification letters last month to Ford Motor Indonesia, Ford Motor Company and Ford International Services in the US.

If not answer is forthcoming, they will launch a lawsuit against the US carmaker, according to the leading lawyer handling the case.

In January, Ford announced it would leave Indonesia and Japan because of a lack of progress in gaining market share and profits. The company's sales in Indonesia last year fell 58% to just under 5,000 vehicles from 12,000 units the previous year.

The overall market, which is dominated by Japanese brands, declined by over 16% to 1,013,300 units.

Ford Motor Indonesia said it would appoint a third party to provide spare parts and aftersales services with dealers asked to submit proposals to obtain the related licences.

See also: Ford cuts its losses in Asia

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