Ford closes Russian transit

Ford pulls out of JV with Russian Sollers. In fact, the American concern only through this joint venture retained its presence in the Russian market after 2019, when it curtailed the passenger business in the country. The company produced light commercial Ford Transits in Tatarstan until March, when it completely suspended support for the project. Sollers has already announced that it will load the factory with Chinese-branded LCVs, although Ford will have a five-year buyback option.

Ford Motor Company announced that it has finalized deal on leaving the Russian joint venture Sollers Ford. The joint venture was controlled through Ford Sollers Netherlands BV, where the American company had 49%, Sollers had 51%. According to the announcement, the stake will be transferred to the joint venture at face value.

Sollers did not comment on the details of the transaction, only confirming that it took place.

Ford explained that the sale follows the complete cessation of all operations in Russia, including production, supply of components, IT and other support. it happened back on March 2, when the company announced an “immediate” shutdown.

Ford’s business in Russia has shrunk so much in recent years. In March 2019, Ford, as part of a large-scale business reorganization in Europe, left the passenger segment in the Russian Federation. The company retained the production of the Transit model at the plant in Yelabuga (Tatarstan), and it was planned to sell the remaining two plants. As a result, only one was sold, in Vsevolozhsk, which at the end of 2021 was transferred to the Korean Sungwoo Hitech.

It was planned to find a buyer for the plant in Naberezhnye Chelny, already working in Tatarstan (see “Kommersant” dated March 27, 2019). But interest in him became known only this year – RTVI wrote that KamAZ CEO Sergey Kogogin and businessman Ruben Vardanyan plan to attract $150 million in investments in the Kama startup, part of which will be used to purchase the enterprise. At the same time, Kommersant’s interlocutors doubt that under the current conditions Ford will be able to receive funds for this asset and withdraw them.

In 2019, Sollers and Ford switched roles in the joint venture. In 2015, Ford gained control as a result of a buyback of a package of preferred shares. In 2019, Sollers exercised an option under which Ford bought out its stake in the joint venture for $135 million and immediately bought control for $75 million (see “Kommersant” dated June 28, 2019). At the same time, Sollers agreed to provide the joint venture with a loan with a limit of $30 million, according to which, if Sollers and Ford terminate the shareholder agreement, the joint venture must repay the loan the next day. Sollers says it happened a long time ago.

Sollers, which traditionally specialized in partnerships with foreign companies, is now losing them en masse.

So, he reported on a dialogue with Mazda on the sale of a stake in a joint venture for the production of cars in the Far East (see “Kommersant” dated September 27). Also, Isuzu Sollers received approval to terminate the special investment contract, and without it, the joint venture is actually not needed (see “Kommersant” dated October 20). Sollers has already announced that at the end of 2022 it will release the first commercial vehicles under its brand on the basis of the former production of Ford Transit. The new LCV line is being created on the platform of a Chinese partner (see “Kommersant” dated September 7).

Ford received the right to repurchase the share within five years if the situation in the country and in the world changes, although Kommersant’s sources do not understand the purpose of the option. Renault has the same opportunity for a share in AvtoVAZ and Nissan for production in St. Petersburg. According to Kommersant’s interlocutors, in the case of Nissan, this was “to a greater extent the desire of Russian officials.”

Automotive expert Vladimir Bespalov considers it unlikely that the share is estimated, as in 2019, at hundreds of millions of dollars, given the shutdown of the plant and unclear prospects for resumption. He believes that, in general, the intergovernmental commission could not approve Sollers’ withdrawal of a large amount of funds from the Russian Federation to pay for Ford’s exit. In addition, he notes, the option tends to lower the price.

Olga Nikitina