A rough year for Ford in the Mexican market

The company's sales dropped by 17.7% in 2017; political and economic issues in the U.S. affected Ford's operations in Mexico
Ford car plant – File photo/EL UNIVERSAL
08/01/2018
10:50
Sara Cantera
Mexico City
-A +A

If you think you had a rough year then better ask car manufacturer Ford Motor Company. In 2017, this company lived one of its most complicated years in Mexico.

On January 3, 2017, Ford canceled the construction of a plant in the central state of San Luis Potosí, a plan which represented an investment of USD$1.6 billion for the country.

“This is a vote of confidence in what we think the president-elect [Donald Trump] is going to pursue and it's right for our business,” Ford's CEO, Mark Fields said upon canceling the plant in Mexico.

While this decision caused some entrepreneurs, local mayors, and general clients to stop buying their vehicles, there were other factors their underperforming sales in 2017.

Ford closed 2017 with a marked sales drop of 17.7% regarding 2016, selling a total of 81,692 units, almost 7,000 vehicles less than in 2009 – the year of the worst automotive crisis.

Their luxury brand, Lincoln, wasn't exempt, as it also sold 33.5% less than in 2016, and overall, Ford dropped from the sixth to the eight place in volume sales in Mexico, surpassed by Honda and KIA.

An analyst from an automotive consultant, who has asked to remain anonymous, claims the cancellation of the plant had a negative effect in Ford's image yet there were also other political and economic factors happening in the United States which affected the company's performance in our country.

“Financially, the brand encountered several challenges in the United States to compensate some of the losses, and we must also add the incursion of new brands and products into the Mexican market. It was a combination of several things,” they explained.

Throughout the past year, at least 20 car dealerships closed or changed owners because the company itself asked some distributors to sell their dealerships to other distributors to consolidate territories.

Expensive products

Another expert explained Ford lost its participation in the Mexican market due to the price increase of their products, particularly when compared to the competition and in post-sale services.

Moreover, resale value of Ford vehicles is less than those of Japanese or European companies.

“They were quite ambitious, regarding the accessories and technology yet there are in the market other alternatives, better priced and with a higher resale value. Depreciation is faster for [Ford] vehicles than for European or Japanese [cars],” they said.

Until November 2017, the best-sold Ford model in Mexico was the Figo, the cheapest subcompact hatchback, followed by the Lobo and Ranger pickup trucks.

The Figo, despite being offered at a lower price than its competitors (like the March, Vento, and Aveo) ended up in the ninth place for subcompacts.

Exports

Ford didn't only neglect the internal market. Their manufacturing plants in Mexico aimed for exportation to the United States also lowered their pace.

At the end of September, their car plant in Cuautitlán, State of Mexico, had to stop production for three weeks due to a demand decrease in the U.S. market for the Ford Fiesta.

Similarly, their car plant in Hermosillo, Sonoroa, suspended production for two weeks due to a decrease in demand of the Fusion and Lincoln MKZ.

EL UNIVERSAL tried to contact representatives of Ford and the Ford Mexican Distributors Association to get their opinion on the performance of their brand during 2017; however, we got no response from either company.

am

INFORMACIÓN RELACIONADA

Mantente al día con el boletín de El Universal

 

COMENTARIOS