FORD

Ford suspends business in Russia, provides aid to Ukrainian refugees

Phoebe Wall Howard
Detroit Free Press

Ford Motor Co. announced Tuesday afternoon that it is suspending its Russian joint venture and donating to a relief fund to assist Ukrainian refugees.

A day earlier, General Motors and other automakers and companies said they planned to suspend business in Russia in response to the unprovoked military attack on Ukraine that began Thursday as well as international sanctions levied against Russia.

Ford said in a statement released Tuesday:

"As part of the global community, Ford is deeply concerned about the invasion of Ukraine and the resultant threats to peace and stability. The situation has compelled us to reassess our operations in Russia. In recent years, Ford has significantly wound down its Russian operations, which now focus exclusively on commercial van manufacturing and Russian sales through a minority interest in the Sollers Ford joint venture. Given the situation, we have today informed our JV partners that we are suspending our operations in Russia, effective immediately, until further notice.

While we don’t have significant operations in Ukraine, we do have a strong contingent of Ukrainian nationals working at Ford around the world and we will continue to support them through this time. Ford Fund is also making a $100,000 donation to the Global Giving Ukraine Relief Fund for humanitarian aid to assist Ukrainian citizens and families who have been displaced during this crisis."

The Dearborn company was the first international carmaker to launch vehicle assembly in Russia, opening a plant in 2002 in St. Petersburg. In 2011, it set up a joint venture with Sollers in Russia. 

Then in March 2019, as part of a corporate restructuring plan, Ford announced it would close three factories in Russia, causing heavy job losses, as it pulled out of passenger vehicle manufacturing. The automaker shuttered vehicle assembly plants in St. Petersburg and Naberezhnye Chelny, as well as an engine plant in Yelabuga, according to the Associated Press

At the time, Ford Sollers employed about 3,700 people in Russia but didn't specify how many cuts would be made.

Presence in Russia

Ford planned to focus on the more lucrative commercial Transit vans in Russia. At the time, the company touted the Transit as "Russia’s top-selling, non-domestic commercial vehicle nameplate with a segment market share of 15%."

Sollers assumed 51% control of the partnership, Ford said in its 2019 news release.

"The Ford Transit line-up is the leader among foreign commercial vehicle brands in Russia, and has tremendous potential for further profitable growth in the years ahead,” Adil Shirinov, CEO Ford Sollers, said in prepared remarks at the time.

In connection with the 2019 announcement, Ford revealed it expected hundreds of millions in charges to the Dearborn automaker. It was one of many reductions meant to cut losses in unprofitable markets.

In 2021, Ford sold just under 20,000 light commercial vehicles, accounting for only about 0.5% of Ford sales globally, according to research analyst Dan Levy in his Credit Suisse investor note sent Monday.

More:GM and some other automakers suspend business to Russia

More:Michigan lawmakers step up calls for Whitmer to 'starve Russian war machine'

GM sold about 3,000 Cadillac and Chevrolet vehicles a year in Russia, GM spokesperson George Svigos said.

Stellantis a top seller

Levy focused on auto industry exposure in Ukraine and Russia.

In 2021, he noted that the dominant brands produced in Russia were Renault-Nissan-Mitsubishi, then Hyundai, Volkswagen and Toyota with more than 1.2 million vehicles. In terms of sales, the same four automakers sold nearly 1.3 million in Russia.

In Ukraine, the Renault-Nissan-Mitsubishi alliance, Toyota, Volkswagen and Hyundai dominated sales in 2021 with more than 1.2 million. Stellantis, which has offices in Auburn Hills, is the No. 4 auto manufacturer in terms of sales.

“At Stellantis, we condemn all kinds of violence and aggression. Whatever the business consequences, Stellantis will apply all of the sanctions decided,” according to a company statement.

The top vehicles produced in Ukraine: Renault-Nissan-Mitsubishi with 3,816 and Volkswagen with 3,261, according to IHS Markit.

Evolving position

Initially, Ford said it would monitor and manage any impacts on its operations, but was mostly concerned for the safety of people in the region. On Monday, Ford spokesperson Ian Thibodeau said the company “will provide updates as warranted” on its plans for its operations in Russia.

More:Ukrainian Americans in Michigan 'watch in horror' as Russia attacks

More:Russian invasion to hit US consumers, automakers already stretched by chip shortage

Russian forces attacked a TV tower in Kyiv, cutting access to broadcasting. The military also destroyed the Holocaust museum in Ukraine as well as civilian buildings. 

Ukrainian President Volodymyr Zelenskyy talked with President  Joe Biden prior to his State of the Union speech scheduled for later in the day. Zelenskyy continues to run operations while in hiding, warning global leaders he may not emerge alive.

Contact Phoebe Wall Howard:313-618-1034 via call/text orphoward@freepress.com.Follow her on Twitter@phoebesaid. Read more on Ford and sign up for our autos newsletter.