Ford may exit some S. American markets, analyst says

A Ford store in Caracas, Venezuela, on May 1. Foreign companies operating in Venezuela have been beset by disruptions stemming from goods shortages, strikes and police raids. Photo credit: BLOOMBERG

UPDATED: 11/21/17 10:12 pm ET - adds Ford statement

Ford Motor Co. is on the verge of taking dramatic action to turn around its money-losing business in South America, including possibly exiting some markets in the region, a JPMorgan analyst said after meeting with two of the company's top executives.

"Ford seems to be working on an out-of-the-box transformational plan to stanch what it deems as unacceptable losses in South America, which we suspect could be announced over the short-term," auto analyst Ryan Brinkman wrote in a note to investors Tuesday.

Brinkman said the company may work more closely with rival automakers, "perhaps even via some sort of formal tie-up. It could also entail selective exits from certain markets."

South America remains important to Ford’s business operations and the company will continue to focus on making it “operationally fit,” spokesman Said Deep said.

Buffeted by economic and political crises in South America, Ford has struggled to earn money in the region.

In the first nine months of the year, the automaker lost $587 million in South America, though that was an improvement on 2016 as it boosted revenue on stronger sales and pricing. Still, most of the industry's recovery on the continent is coming from low-margin fleet sales, Brinkman wrote after meeting with CFO Bob Shanks and Jim Farley, president of global markets.

General Motors Co. shut down operations in Venezuela this year after the government seized its factory there.

Ford, which has a factory in Valencia, "is dedicated to doing whatever it takes to stanch the unacceptable losses in the region," Brinkman wrote.

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