In January, news broke that Ford Motor Company would be pulling out of both Japan and Indonesia by the year’s end, citing the fact “that there is no path to sustained profitability” in either of the two Asian countries.
Now, six businesses in Indonesia – which together account for 85 percent of Indonesia’s Ford sales – are seeking $75 million from the automaker to cover investments they made to support Ford’s redundant expansion plans there. This news comes from Reuters, which reports that the six companies and their combined 31 dealerships are ready to sue Ford if they don’t receive repayment.
In 2011, Ford announced an expansion plan which saw its Indonesian dealers make substantial investments to upgrade showrooms and other facilities, before the automaker’s sudden decision to withdraw from the country this year. “This is something that was done unilaterally and was unfair for the Indonesian partners,” Harry Ponto, the dealers’ legal representative, told Reuters. “It’s an action that is beneath an international brand like Ford.”
One of the Ford dealers in Indonesia to whom Reuters spoke, PT Kreasi Auto Kencana, invested more than $38 million US in buildings, equipment, and labor over the past few years. Now, with Ford’s recent decision to leave the country, the dealer stands to lose a substantial sum.
Ford currently accounts for less than one percent of all new vehicle sales in Indonesia. The automaker is exiting all areas of business – including sales and imports – while working out a strategy to continue offering parts, service, and warranty support.