Ford's Indonesian dealers demand compensation after abrupt withdrawal

Mon Jun 27, 2016 12:26pm EDT
 
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By Eveline Danubrata and Yuddy Cahya

JAKARTA (Reuters) - Ford Motor Co's (F.N: Quote) dealers in Indonesia are demanding around $75 million in compensation after the U.S. carmaker announced in January it would close all operations in Southeast Asia's biggest economy.

The car market in Indonesia is dominated by Japan's Toyota Motor Corp (7203.T: Quote) and Honda Motor Co Ltd (7267.T: Quote). Last year, General Motors Co (GM.N: Quote) shut its factory near Jakarta. (reut.rs/28XQvwS)

Six businesses which oversee 31 Ford dealerships in Indonesia say they have sent a second letter about possible legal action to Ford, Ford International Services and PT Ford Motor Indonesia.

In a joint statement on Monday, the dealers say they will take the Ford companies to a Jakarta court if there is no settlement, Harry Ponto, the dealers' legal representative, told Reuters by phone. They say they account for 85 percent of Ford's total sales in Indonesia.

Ford's decision came "out of the blue" for local dealers, which had made sizeable investments in showrooms and other facilities to support an expansion plan that Ford announced in 2011, Ponto said.

"This is something that was done unilaterally and was unfair for the Indonesian partners. It's an action that is beneath an international brand like Ford," Ponto said.

Ford's move could damage the confidence of Indonesian businesses in foreign investors, he said.

The automaker, which had a less than one percent market share in Indonesia, said in January it would exit all areas of business including sales and imports.   Continued...

 
An aerial view shows the Ford showroom in Jakarta, Indonesia, June 27, 2016. REUTERS/Beawiharta