Ford Motor Co to cease auto production in Brazil

Author: Adam Yanelli

2021/01/11

HOUSTON (ICIS)--Ford Motor Co will cease vehicle production in Brazil in 2021 as part of its South America restructuring plan, instead choosing to service the region from Argentina, Uruguay and other markets, the US automaker said on Monday.

The company said the Brazil market will still be offered its full portfolio, including the popular Ranger pickup, Transit van and several of its most iconic models, with plans to launch several new connected and electrified vehicles.

Ford said it would immediately begin working closely with its unions and other stakeholders to develop an equitable and balanced plan to mitigate the impacts of ending production.

“We are moving to a lean, asset-light business model by ceasing production in Brazil and serving customers with some of the best and most exciting vehicles in our global portfolio,” Ford president and CEO Jim Farley said. “We will also accelerate bringing our customers the benefits of connectivity, electrification and autonomous technologies to efficiently address the need for cleaner and safer vehicles well into the future.”

Production will cease immediately at Camacari and Taubate in Brazil, with some parts production continuing for a few months to support inventories for aftermarket sales. The Troller plant in Horizonte, Brazil, will continue to operate until Q4 2021. As a result, the company will end sales of EcoSport, Ka and T4 once inventories are sold.

Ford's shutdown plans came shortly after the Brazilian Auto Makers Association (ANFAVEA) reported that 2020 automobile production fell by 31.6% to reach 2.01m. The decline halted the industry's three-year recovery from the downturn in 2015-2016.

Exports reached 324,330, the worst year since 2002.

Looking ahead, production in 2021 should rise by 25%, ANFAVEA said. The increase will be insufficient to return output to 2019 levels.

Meanwhile, auto licenses should rise by 15% and exports by 9%.

ANFAVEA noted that Brazil ended 2020 with stocks of vehicles at all-time lows, hardly enough to meet 12 days of sales.

Ford will maintain full customer support operations with sales, service, aftermarket parts and warranty support in Brazil and South America, according to the release. Ford will also maintain its product development center in Bahia, its proving ground in Tatui, Sao Paulo, and its regional headquarters in Sao Paulo.

Ford is actively evaluating its businesses around the world to achieve 8% company adjusted EBIT margin and generate consistently strong adjusted free cash flow.

The automotive industry is a major global consumer of petrochemicals, which make up more than one-third of the raw material cost of an average vehicle.

Several chemicals have a significant percentage of their demand tied to the global auto industry. They include nylon resins, styrene butadiene rubber (SBR), polypropylene (PP), acrylonitrile-butadiene-styrene (ABS), polymethyl methacrylate (PMMA), and polycarbonate (PC).

Additional reporting by Al Greenwood

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