The complete exit of automaker General Motors Company (NYSE:GM) from the Russian auto industry has surprised the experts. However, GM’s retreat does not seem to dread other auto makers in the country. In a recent statement, Ford Motor Company (NYSE:F) said that even though the Russian market has a huge potential for long term, but it always remains challenging and volatile.
Abandoning the major regional market: A good decision?
An analyst at IHS Automotive, Tim Urquhart, while talking to Forbes, said that a decision like this by a global automaker is totally unprecedented. Tim Urquhart opines that abandoning a huge market like this, especially after having sold more than 300,000 vehicles there, is quite shocking. It is important to mention here that GM has remained a key auto player in the Russian market at some point.
Ford will stick out for long
The instant sign of this act by GM have already started showing. Ford Motor Company (NYSE:F), for example, has openly come out to comment that it shall remain in this market for enduring period. There are no lined-up plans in the pipeline to alter any model launches for Russia. Also, Ford said that it is bringing down the costs of its vehicles and also expanding the line-up in Ford Sollers JV, its partner.
General Motors Company (NYSE:GM)’s retreat has prompted Ford, in fact, to act better and strengthen its market position. However, Ford is waiting for market recovery as well.
Russia: A Scary Place for Auto Market
It cannot be phased out that Russia is a dreadful place for the auto market. The car sales in this country dropped 38% in February 2015. This was preceded by a 10% sink in 2014. Russia, at present, is finding a challenging environment in terms of sinking oil & gas prices. According to Tim Urquhart, economic meltdown is also on the cards in 2015, for Russia. He is calling it a “perfect storm.”