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Ford punished with 18% decline in sales

Killing factory plant was one factor that hurt sales in Mexico, say analysts

United States automaker Ford had a bad year in Mexico in 2017 and according to two industry analysts, the election of President Donald Trump was at least partially to blame.

After repeatedly being attacked by Trump during the presidential campaign for building new vehicles in Mexico, Ford announced in January 2017 that it was canceling the construction of an auto plant in San Luis Potosí where it had planned to invest US $1.6 billion.

At the time, the now-former CEO of Ford, Mark Fields, said the company was encouraged by polices that the then president-elect had repeatedly declared he would pursue.

Trump announced his support for the decision on Twitter on January 4, 2017: “Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. . . .” he wrote.

However, the factory cancelation prompted some potential customers, including members of the Mexican business sector and municipal governments, to boycott the company in retaliation.

One automotive industry analyst who spoke to the newspaper El Universal on the condition of anonymity agreed that the factory cancelation had affected Ford’s reputation — and sales — in Mexico.

However, he added that other political and economic factors in the United States had also had a negative impact on its performance.

“. . . we’re jingoistic and that surely affected the purchasing decisions of a percentage of customers but there were also inventory problems, the supply of vehicles was limited. A new compact model should have come out in 2017 but its launch was delayed,” the analyst said.

Financial challenges in the U.S. and recent entrants to the Mexican market also had an effect on Ford, he said.

The most striking example of the latter is South Korean manufacturer Kia, which experienced almost 50% sales growth last year.

Whatever the reasons, the company’s vehicle sales declined by 17.7% on 2016 figures to 81,698 units, almost 7,000 fewer than 2009 when the automotive sector as a whole experienced a slump.

Ford consequently dropped from the sixth most popular make in Mexico to eighth, surpassed by Honda and Kia. Sales made by its luxury division Lincoln fell by an even greater margin, down 33.5% compared to 2016 numbers.

Another analyst agreed that the auto plant’s cancelation had affected the company’s sales but added that an increase in the costs associated with buying a Ford vehicle, especially after-sales service, had made the company less competitive. The resale value is also less than Japanese and European-made cars, he added.

Declining demand in the export market rounded out a bad year in Mexico for the Detroit-based manufacturer.

Its México state plant stopped production for three weeks in September due to a drop in Ford Fiesta sales in the U.S. market, while its facility in Hermosillo, Sonora, also shut down for two weeks because of reduced demand for the Fusion and Lincoln MKZ models.

Source: El Universal (sp)

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