Ford Motor Co. said on a statement on Friday said it would take interest in a joint venture with Sollers OJSC. The American automaker mentioned that this move will provide additional funding to the venture and will also open doors for a better partnership. This plan was conceived at a time when auto sales in Russia are plummeting.
Looking back, Ford’s latest investment strategy contrasts the one made by General Motors Co. The company mentioned last month said it was closing its Russian plant and is holding most of its products in the market. This was GM’s strategy in meeting its European profit targets. Latest markets show that Russian car sales fell 43% last month. The numbers were the latest in repeated declines starting from early 2014. Russian car sales have collapsed despite larger problems in the economy and political turmoil in the country.
Ford did not make any comment on the matter yet and has not revealed the size of its planned investment. In 2011, it has acquired its joint-venture stake in Sollers for a hefty $364 million.
“We’ve made a bet on Russia,” Ford Chief Financial Officer Bob Shanks mentioned in a meeting with financial experts. “It’s being hurt right now for what’s going on in terms of oil prices, as well as the geopolitical issues. But we still have confidence that over time it could be an attractive market.”
The latest investment is a consolidated joint-venture intended for financial-reporting purposes. Ford will work with Sollers which is a company that has partnerships with foreign car companies. This will expand Ford’s business in Russia and expand into local parts manufacturing. However, the company has stated that all these changes will have no impact on its first-quarter results which will soon be available later in April.
“We welcome the intentions of Ford Motor Co. to provide the necessary financial support to the joint enterprise, which will create a platform for subsequent growth,” said Sollers Deputy Chief Executive Nikolai Sobolev in an exclusive statement about the potential merger.
The Ford Motor Company is an American multinational automaker with headquarters in Dearborn, Michigan. It was founded by Henry Ford on June 16, 1903. The company manufactures and sells automobiles as well as commercial vehicles under the Ford brand while its luxury cars line under the Lincoln brand. The company also owns Brazilian SUV manufacturer Troller and Australian FPV. It is listed on the New York Stock Exchange and controlled by the Ford family. According to Forbes, Ford is “the most important industrial company in the history of the United States.” According to the latest market information, Ford is the second-largest U.S.-based automaker and the fifth-largest in the world according to 2010 vehicle sales. At the end of 2010 Ford is considered one of the largest auto company in Europe and is the eighth-ranked American-based company in the 2010 according to a Fortune 500 list, according to global revenues in 2009 of $118.3 billion. Ford produced 5.532 million automobiles in 2008 and employed about 213,000 employees. These numbers are according to Ford’s 90 plants and facilities all over the world. Ford stock market evolution: http://www.marketwatch.com/investing/stock/f
About Bob Shanks
Bob Shanks is Ford Motor’s executive vice president and chief financial officer in April 1, 2012. He has overall responsibility for Ford financial operations, including the controller’s office, treasury and investor relations. He has a bachelor’s degree in Foreign Service from Georgetown University in 1975 and a master’s in international management from the American Graduate School of International Management in 1976.
Sollers formerly known as OAO Severstal-Auto is a Russian company holding controlling blocks of shares of OAO Ulyanovsk Automobile Works (UAZ), Zavolzhye Motor Works (ZMZ) and OAO ZMA. The enterprises of Severstal-Auto are well-known automobile brands and occupy stable positions in their market segments. Sollers stock market evolution: http://www.reuters.com/finance/stocks/overview?symbol=SVAV.MM
About Nikolai Sobolev
Nikolay Sobolev is the member of Sollers board of directors. He is the first Deputy Director General and Chief Financial Officer of Sollers. He earned his degree from Lomonosov Moscow State University, Academy of National Economy under the Government of the Russian Federation, MBA Kingston (UK), Candidate of Economic Sciences. In 2000 he received his MBA from Business School of Kingston University (UK), 2002 he was a Candidate of Economic Sciences, Moscow State University. Since January 2005 he was a Financial Director of Sollers OJSC and since May 2009 he is the First Deputy General Director of Sollers OJSC.