January 21, 2009 / 11:44 AM / 11 years ago

Ford resumes production at Russian plant

ST PETERSBURG, Russia (Reuters) - Ford Motor Co. (F.N) said on Wednesday it has resumed production at its Russian plant after a steep drop in demand forced the U.S. automotive giant to idle its local assembly lines for one month.

“The plant restarted production in three shifts as usual. During the winter holidays the plant managed to prepare for the launch of the Mondeo, which is expected in March,” Ford Russia spokeswomen Yekaterina Kulinenko said.

The launch of the new sedan had initially been planned for the fall of 2008.

But around the same time, the global credit crisis led many Russian banks to stop granting affordable car loans, causing a sharp contraction in demand for cars. Rising unemployment, wage arrears and the creeping devaluation of the ruble have since exacerbated the problem.

In November, sales of all foreign cars fell 15 percent year on year followed by a 10 percent drop in December, the first declines recorded by the Association of European Businesses.

Ford saw an even steeper fall, with sales down 21 percent year on year in November and 15 percent in December, the AEB data showed.

Global auditor PricewaterhouseCoopers forecasts a 25-50 percent drop in Russia’s overall car sales this year.

Ford halted its assembly line in St Petersburg from December 24 until January 21, citing lower sales forecasts and the overall market condition.

The world car industry faces an uncertain future as tight credit conditions and deepening consumer uncertainty cripple sales. All major automakers reported double-digit declines for U.S. auto sales at the end of last year.

In June, Ford Europe Vice-President Wolfgang Schneider said the St Petersburg plant’s total annual capacity would reach 125,000 units in 2009.

Reporting by Denis Pinchuk and Simon Shuster

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