Ford Deploys New Models in Battle for Russia Market

ST. PETERSBURG, Russia – Ford opts to scale back but not suspend production of Focus and Mondeo models at its plant in Vsevolozhsk, Russia.

The automaker built 3,974 Focus units in the first quarter of this year at the plant near St. Petersburg. Full-year output may not exceed 18,000 cars after reaching 30,000 in 2014, when operations were suspended for 58 days in the first half and for all but two weeks from the end of October up to the Christmas holidays. Design capacity is 125,000 units.

The facility came back on line after the holidays a week later than other St. Petersburg-area auto plants. Ford says the shutdowns were prompted by preparations for production of the new models.

Analysts with the Russian Ministry of Industry and Trade note the automaker’s updating of its local product range is overdue, but they do not expect the new-model launches to significantly increase sales in the short or middle term.

Ford sales in Russia decreased 38% to 65,966 in 2014, compared with a 10.3% decline by the overall market, WardsAuto data shows. Sales of the flagship Focus model tumbled 60% year-over-year in 2014 to 28,000 units.

In the case of Ford’s new Mondeo, the analysts say that in light of Russia’s ongoing economic decline its relatively high price, which will range from RR1.1 million-RR1.8 million ($25,000-$35,000) depending on the grade, means demand may be considerably below Ford estimates.

Ford’s situation is aggravated by some dealers’ refusal to sell cars built by an American company while the U.S. has economic sanctions in place over Russia’s annexation of Crimea and its support for separatist rebels in Ukraine. Evrosib Avto, one of the country’s leading auto wholesalers, suspended sales of Ford cars at some of its dealerships in St. Petersburg at the end of January.

Ford opened its factory in Vsevolozhsk in 2002 and formed a joint venture with Russian vehicle assembler Sollers in 2011. The JV also manufacures the Ford EcoSport at a plant in Naberezhnye Chelny and the Ford Transit, Tourneo Custom, Edge, S-Max, Galaxy, Explorer and Kuga at a facility in Alabuga in the republic of Tatarstan.