Ford Motor Wasted 61 Billion Reais By Deciding to Close Plants, Halt Vehicle Production, and Exit Brazil

Ford ‘Burned’ R$ 61 Billion In Its Operations In Brazil, And Multinationals Volkswagen, GM, And Toyota Also Accumulate Billion-Dollar Losses In The Country

Ford Motor accumulated a loss of R$ 61 billion in its Brazilian operations. The figures consider recent years and the amount that will need to be paid to cease operations in three factories located in Brazil. The amount was revealed by Reuters. To give you an idea, the American company burned through the equivalent of 610,000 EcoSport Titanium 1.5 AT 2021.

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According to Reuters, “Ford had burned US$ 7.5 billion (R$ 39.5 billion), most of it in accumulated losses, but also in some cash injections, according to documents filed in the state of São Paulo, where the automaker is registered in Brazil.”

In addition to this amount, the agency considered another US$ 4.1 billion (R$ 21.6 billion) that will be spent on closing three factories, with severance payments for more than 5,000 workers and 300 dealerships, totaling US$ 11.6 billion, equivalent to R$ 61 billion. The frequent losses led Ford to decide to end car manufacturing in Brazil.

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Volkswagen, GM, And Toyota Also Accumulate Billion-Dollar Losses In Brazil

Still according to Reuters, at least three other automakers have accumulated billion-dollar losses in Brazil: “Volkswagen Brazil has accumulated a loss of US$ 3.7 billion (R$ 19.5 billion) since 2011, according to Jucesp records. GM Brazil received US$ 2.2 billion (R$ 11.6 billion) in cash injections since 2016 and Toyota Brazil, last year, received forgiveness for US$ 1 billion (R$ 5.3 billion) in debts with its parent company, the documents showed.”

The Reuters report states that the parent company supported Ford Brazil with nine capital injections between March 2018 and January 2021, amounting to US$ 1.3 billion (R$ 6.8 billion). According to journalist Marcelo Rochabrun, who signed the Reuters report, the data is included in the files of the Commercial Board of the State of São Paulo (Jucesp).

In the last eight years, every car sold by Ford in Brazil represented a loss of around R$ 2,000 (R$ 10.5 thousand). Reuters points to two “culprits” for Ford’s billion-dollar losses: the business environment and the company itself. Between 2011 and 2019, Ford increased sales of cars to fleet owners fivefold, with discounts of 30% or more. “A 2019 study by PwC found that selling a Mexican car in Brazil was 12% cheaper for an automaker than selling a locally made vehicle, including production costs, taxes, and logistics,” the report explained.

After Interrupting Vehicle Production And Leaving The Country, Ford Motor Lands 450 Cars At The Port Of ES And Will Bring 30,000 Vehicles To Brazil Produced In Factories Abroad

After ceasing to manufacture vehicles and closing its factories in Brazil, the automaker Ford Motor has begun importing vehicles through the Port of Vitória. Last week, 450 cars arrived, which reached the state by the ship Torrens. The estimate is that approximately 30,000 cars will arrive in Brazil annually via Espírito Santo.

Last Tuesday, May 18, the first vehicles from the American manufacturer arrived at the port of Vitória. Previously, Ford brought its cars through Baixada Santista and Bahia.

Now, the Port Terminal of Vila Velha (ES) will be Ford’s only entry point into Brazil. According to Log-In Logística, the company responsible for operations, the complex will receive approximately 28,000 to 30,000 cars from the American company each year.

Just Like The Iconic Volkswagen Kombi, New Legislation Will Make The Uno, Doblo, And Grand Siena From Fiat Disappear This Year

According to journalist Fernando Calmon, columnist at the AutoPapo Portal, the multinational Fiat will have to cease production of the Uno, Doblo, and Grand Siena. This is because, starting January 2022, a new phase of Proconve, L-7, will come into effect, and the three models from the Italian automaker will disappear due to the new environmental control emission requirements, just as happened in 2014 with the iconic Volkswagen Kombi, due to the requirements for airbags and ABS brakes.

According to Calmon, Fiat’s factory does not believe it is worth investing in new tanks and fuel systems in these cars to meet the new evaporation limits from gasoline and ethanol tanks.