Ford is closing three factories in Russia as it pulls out of passenger vehicle manufacturing in the country, causing heavy job losses.
Ford says it will stop making passenger cars in Russia by the end of June, closing vehicle assembly plants in St. Petersburg and Naberezhnye Chelny, as well as an engine plant in Yelabuga.
A statement from Ford said, “significant employee separations are required.”
The U.S. carmaker blames a slow recovery in the Russian car market after an economic slowdown in recent years, and moves toward cheaper cars.
Ford will now focus solely on commercial Transit vans in Russia through its Ford Sollers joint venture.
Ford has repeatedly paused or scaled back production at the St. Petersburg plant in recent years, citing low customer demand.
A restructured Ford Sollers will focus on commercial vehicles, while passenger vehicle production will cease by the end of June, the companies said.
“The new Ford Sollers structure supports Ford’s global redesign strategy to expand our leadership in commercial vehicles and to grow the business in Europe in those market segments that offer better returns on invested capital,” Steven Armstrong, president, Ford of Europe, said in the statement.
Ford was the first international carmaker to launch vehicle assembly in Russia, opening a plant in St Petersburg in 2002. In 2011, it set up a joint venture with Sollers in which Ford and Sollers each hold a 50 percent stake, but Ford has controlled the business since buying up preferred shares.
Sales of new cars in Russia are expected to rise 3.6 percent this year, marking a slowdown from last year, according to an estimate from the Association of European Businesses lobby group.
“The Russian passenger vehicle market has been under significant pressure in recent years, with recovery slower than expected and a shift to lower priced passenger vehicle segments,” Ford said.