Ford Sollers Confirms Restructuring to Focus on Commercial Vehicle Growth; Exits Passenger Car Segment
Shareholders, Ford Motor Company and Sollers PJSC, confirm the restructuring of Russian operations with Sollers PJSC taking a controlling interest in restructured JV
New business structure builds on Ford Transit strength as Russia’s top-selling, non-domestic commercial vehicle nameplate and maintains a strong brand presence in the country
Exiting passenger vehicle market to help deliver a more competitive and sustainably profitable business going forward
Passenger vehicle production to cease by end June 2019, with closure of two vehicle assembly plants – Naberezhnye Chelny and Vsevolozhsk – and an engine plant in Elabuga
Warranty and service requirements to be fulfilled for remaining passenger car sales
Moscow, Russia, 27th March, 2019 – Shareholders, Ford Motor Company and Sollers PJSC, has signed a Memorandum of Understanding (MoU) on a significant restructuring of Ford Sollers operations, focusing exclusively on growing its commercial vehicle business moving forward. The new structure will enable the company to build on the strength of the Ford Transit, Russia’s top-selling, non-domestic commercial vehicle nameplate produced at its Elabuga assembly plant in Tatarstan which has achieved sales growth of 200% percent over the past three years.
The MoU follows a strategic review of the joint venture by shareholders Ford and Sollers PJSC, intended to improve near term profitability and investment efficiency in a challenging business environment. Final negotiations are expected to conclude in the following months.
“This represents an important step towards Ford’s target to deliver improved profitability and a more competitive business for stakeholders,” said Steven Armstrong, group vice president and president, Europe, Middle East and Africa, Ford Motor Company. “The new Ford Sollers structure aligns with our strategy to further strengthen our European commercial vehicle leadership and delivers on our commitment to make tough decisions on exiting less profitable segments, such as the passenger vehicle market in Russia.”
Shareholders Ford and Sollers PJSC will continue in partnership, with Sollers PJSC taking a 51 percent controlling interest in the restructured joint venture
“We look forward to starting the next chapter of our long term partnership with Ford in Russia,” said Vadim Shvetsov, CEO Sollers. “We believe our decision to focus on the Russian light commercial vehicle market will result in a stronger performing joint venture, and enables us to benefit from future market growth in this segment.”
As part of the restructuring action, Ford Sollers passenger car production will cease by the end of June 2019 with the closure of vehicle assembly plants in Naberezhnye Chelny and Vsevolozhsk, and an engine plant in Elabuga. Significant employee separations will be required and will be delivered through voluntary programs to the fullest extent possible.
Ford Sollers is in the process of consulting all stakeholder groups to implement the restructuring actions and manage associated issues on a timely basis.
“While the actions we are announcing today are difficult, they are critical to ensure the long term viability of the Ford Sollers business. 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,” said Adil Shirinov, CEO Ford Sollers.
Ford Sollers also confirmed it will continue to meet warranty and service requirements for existing and future owners of all Ford branded vehicles purchased in Russia.