Ford Launches Mondeo Production in Russia Amid Worsening Industry Crisis
Output of the sedan was to begin in September at Ford’s plant in Vsevolozhsk, near St. Petersburg, which also builds the Ford Focus.
Ford Motor Co. ZAO has begun production of its Mondeo midsize sedan in Russia, after postponing the launch due to the ongoing global economic crisis that has severely depressed the booming emerging market.
Mondeo output was to begin in September at Ford’s plant in Vsevolozhsk, near St. Petersburg, which also builds the Ford Focus.
Initial plans called for 25,000 Mondeos to be manufactured annually at the facility, but a Ford spokesperson tells Russian news agency RIA Novosti that figure likely will be revised downward.
Ford in December ceased Russian production for a month to align capacity with demand.
The first Mondeos are on their way to dealerships, a Ford Russia spokeswoman is quoted as saying, and “when they go on sale, we will announce that separately.”
Just a year ago, analysts were predicting Russia would eclipse Germany as Europe’s largest automotive market by 2010, but since then conditions have worsened.
PricewaterhouseCoopers Russia forecasts a 25%-50% drop in the country’s light-vehicle sales this year, with production falling to 1.6 million vehicles from 3.2 million in 2008.
Ford Mondeo sedan enters depressed Russian market.
In an effort to stabilize the market, the Russian government last month began subsidizing consumer car loans. The loans, worth a total 2 billion rubles ($56 million), are available for buyers to purchase one of 30 foreign or domestic models, Reuters reports.
Additionally, the government plans to spend another RR12.5 billion ($347 million) through 2011 to buy up excess vehicle components and unsold commercial vehicles from the domestic auto makers, as well as Fiat Auto Group’s Iveco truck division and Korea’s Ssangyong Motor Co. Ltd.
The government also has placed a 30% import duty on used cars in order to prop up the struggling new-car industry.
Despite federal assistance, the future of Russia’s domestic auto makers remains unclear. Russian car and commercial-truck maker GAZ Group, and OAO AvtoVAZ, the country’s largest vehicle manufacturer, both are operating their factories intermittently.
GAZ says it may have to merge, or shutter, some plants as the economic crisis wears on.
AvtoVAZ ceased production for the month of January due to falling demand and disputes with key suppliers. The auto maker also has shortened its workweek and implemented widespread pay cuts.
AvtoVAZ currently is seeking RR36.2 billion ($1 billion) from the Russian government to help it survive the crisis. GAZ has said it has no plans to appeal for government assistance.
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