Ford Motor Co. in Dearborn today announced it will serve customers in the South America region with a portfolio of connected and increasingly electrified SUVs, pickups, and commercial vehicles sourced from Argentina, Uruguay, and other markets, as Ford Brazil ceases production operations in 2021.
Ford will serve the region from its global product portfolio, including the all-new Ranger pickup built in Argentina, new Transit van, Bronco, and Mustang Mach 1, and plans to accelerate the introduction of several new connected and electrified models.
Ford states it will continue to offer full customer support operations with sales, service, aftermarket parts, and warranty offerings in Brazil and South America. Ford will also maintain its product development center in Bahia, its proving ground in Tatuí, São Paulo, and its regional headquarters in São Paulo.
“With more than a century in South America and Brazil, we know these are very difficult, but necessary, actions to create a healthy and sustainable business,” says Jim Farley, president and CEO of Ford. “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. 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.”
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.
“Our dedicated South America team made significant progress in turning around our operations, including phasing-out unprofitable products and exiting the heavy truck business,” says Lyle Watters, president of Ford South America and the International Markets Group. “In addition to reducing costs across the business, we launched the Ranger Storm, Territory, and Escape, and introduced innovative services for our customers. While these efforts improved results over the past four quarters, the sustained unfavorable economic environment and the additional burden of the pandemic made it clear that much more was necessary to create a sustainable and profitable future.”
Ford is actively evaluating its businesses around the world, including in South America, making choices and allocating capital in ways that advance Ford’s plan to achieve an 8 percent company adjusted EBIT margin and generate consistently strong adjusted free cash flow.
Ford’s plan calls for developing and delivering high-quality, high-value, connected vehicles — increasingly electric vehicles — and services that are affordable to an even broader range of customers and profitable for Ford. The company said it is moving quickly to:
- Turn around its automotive business by simplifying and modernizing all aspects of the company, and
- Grow by capitalizing on existing strengths, disrupting the conventional automotive business, and partnering with others to gain expertise and efficiency.
Watters says Ford intends bring to market a lineup of connected and electrified SUVs, pickups, and commercial vehicles from within and outside of the region.
In addition to the recently confirmed production of the next generation of Ranger and the arrival of the Bronco, Mustang Mach 1, and Transit van, Ford plans to announce other all-new models, including a new plug-in vehicle. This includes expanding connected services and introducing new automated and electrified technologies to South America.
Production will cease immediately at Camaçari and Taubaté 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 the fourth quarter of 2021.
As a result, the company will end sales of EcoSport, Ka, and T4 once inventories are sold. Manufacturing operations in Argentina and Uruguay and the sales companies in other South America markets are not affected.
Ford will continue to facilitate possible reasonable alternatives for interested parties to take over available production facilities.
In connection with this announcement, Ford currently expects to record pre-tax special item charges of about $4.1 billion, including about $2.5 billion in 2020 and about $1.6 billion in 2021.
The charges will include about $1.6 billion of non-cash charges related to writing-off certain tax receivables and for accelerated depreciation and amortization. The remaining charges of about $2.5 billion will be paid in cash, primarily in 2021, and are attributable to separation, termination, settlement and other payments.
