Following Ford Motor Co.’s (NYSE:F) January announcement that it will discontinue operations in Indonesia by the end of this year, six Indonesian dealers are seeking compensation worth $75 million. These dealers, which manage 31 Ford dealerships in Indonesia and account for 85% of its total sales in the country, are threatening to file a lawsuit in Jakarta if the company refuses to pay.
Ford had announced plans to discontinue its operations in Japan as well as Indonesia as it has struggled to expand its market share in these countries and does not expect sustained profits from them. The automaker has a mere 0.1% market share in Japan and a 0.6% market share in Indonesia. Both these markets are dominated by Japanese automakers.
However, the Indonesian dealers were not expecting such a drastic action as Ford had announced an expansion plan in 2011. In fact, they had made various investments in showrooms, buildings, equipment and manpower based on the automaker’s plans. As a result, they stand to incur substantial losses from Ford’s exit plan.
However, Ford maintains that it does not see any possibility of sustained profits from Indonesia and hence, will completely wrap up its business there, including sales and imports. It will only provider customer support in the region.
Zacks Rank
Ford currently carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Spartan Motors Inc. (NASDAQ:SPAR) , Oshkosh Corporation (NYSE:OSK) and Superior Industries International, Inc. (NYSE:SUP) . All these stocks sport a Zacks Rank #1 (Strong Buy).
FORD MOTOR CO (F): Free Stock Analysis Report
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OSHKOSH CORP (OSK): Free Stock Analysis Report
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