As your dealership most certainly understands, the past several years have been a tumultuous time – to say the least – in the automotive industry. From figuring out how to properly integrate into a tech-oriented and potentially service-based future that features ride-hailing and self-driving options at the forefront of the marketplace to dealing with constantly changing regulations and legislation at home and abroad, it seems that one major decision has constantly followed the other for the brands in this space.
However, as Adam Levine-Weinberg of The Motley Fool reports, one of the most quietly important decision points for American automakers over the past decade appears to be reaching its conclusion – and the news doesn't bode well for Detroit-based Ford Motor Company.
According to Levine-Weinberg, Ford's recent announcement that it will be shuttering operations related to passenger vehicles in Russia is a decided catastrophe for the company – and vindication of a decision by General Motors (GM) leadership from years ago that was met with plenty of confusion and second glances from others in the industry.
Essentially, after the 2012 post-recession peak began tapering off in Russia, Ford and GM stood at an important crossroads related to this emerging market: Either double-down and continue invest in the promise of Russian auto sales or scrap the project and focus instead on operations closer to home. Ford chose the former, even going so far as to become the first foreign automaker to build engines in Russia, while GM went with the later and chose to exit the market.
Now that Ford has finally admitted defeated after years of failed investment and little to no return thanks to a weak ruble, international sanctions, tough regulations, volatile oil prices, and increasing demand for less profitable lower-priced vehicles, the prudent move by GM's Chief Executive Officer (CEO) Marry Barra looks better than ever.
So where does Ford go now that it has failed in Russia while Barra and the GM team created a market cap more than 30 percent higher than its adversary by reading the writing on the wall and restructuring its international business plan years ago? As Levine-Weinberg explains, Ford should have followed in the footsteps of GM from the start, but starting down this path late is still better than never.
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