Hyundai Motor Company and Kia Motors are on a roll in Russia while Ford, which was the number one in the local market, is in the face of a halt in production and layoff.
Ford used to be the largest foreign automaker in Russia between 2004 and 2008 and the popularity of its main models such as the Focus was extremely high to the point of undersupply.
However, according to the KOTRA’s trade center in St. Petersburg, Ford Sollers that is located in Leningrad laid off 600 employees in April and is going to dismiss 100 more this month. The plant, which manufactured Focus, Mondeo and the like, has been shut down since April. The company sacked 430 workers in 2013, too. They were relocated to Sollers’ factories in other regions or partner firms.
Ford explained that the business curtailment was due to the extended Ukraine crisis and the rapid drop in the U.S. dollar-ruble exchange rate but the explanation is not that persuasive because the local production volumes of Hyundai, Toyota and GM fell by just 3 percent year on year during the same period.
The sales volume of the Ford Focus was almost halved from 16,732 to 8,374 between the first quarters of 2013 and 2014. The Association of European Businesses in the Russian Federation (AEB) recently announced that Ford’s sales ranking fell from first to fifth between 2010 and last year. In 2010, the U.S. automaker had sold no less than 67,041 cars in Russia.
It is the Solaris of Hyundai’s local brand that took the place of the Focus. The model made its debut in the local market four years ago and snatched the top spot in just three years with a sell-through of 113,991 units. Kia Motors jumped from the eighth to third place between 2010 and 2013 by boosting the sales from 29,165 to 89,788 units, too.
The Hyundai Motor Group is overwhelming the others in the size of investment in local production facilities as well. Hyundai Motor Company, which entered the Russian market in 2010, has invested US$500 million in the automobile manufacturing facilities in St. Petersburg. It is followed by Ford (US$330 million since 2002), GM (US$300 million since 2008) and Toyota (US$270 million since 2007).
“Today’s Russian automobile market is one of the hottest in the world and global automakers are renewing their local marketing strategies over and over,” said an industry source, adding, “It seems that Hyundai and Kia hit the mark there by looking well into the economic conditions and personal preferences and making timely changes.”