Ford exiting Japan and Indonesia

Ford announced this week that they will close operations in Japan and Indonesia and that they sold just over 11,000 vehicles in the two markets in 2015. That number is just so baffling low to me considering that Ford sold 25,576 Fusion in December 2015 alone in the US! How can they not even sell more than 20,000 vehicles in a year in two markets that have a combined population of over 370 million people?!

As a startup ourselves, we’ve constantly been drilled on the importance of establishing product market fit and that made me wonder if Ford suffered the same fate as many failed startups that sold a product that customers didn’t want. Looking at the Indonesian market which arguably is much more important than the Japanese market because of it’s low vehicle penetration, vibrant population, and growing economy, it’s obvious that Ford had failed miserably to tailor their offerings for the local market. Here are the five models that Ford offered in Indonesia.

  Car type
Fiesta Mini
Focus Compact
Ecosport SUV
Everest SUV
Ranger Truck

If you don’t live in Indonesia you probably won’t see anything wrong with that line up but any local can quickly point out that the most popular type of vehicle is MPV (multi purpose vehicle) or more commonly known as a minivan in the US. Here is a list of the top 5 vehicles in Indonesia in 2013.

  Make and model Car type
1 Toyota Avanza MPV
2 Daihatsu Xenia MPV
3 Toyota Kijang Innova MPV
4 Suzuki Ertiga MPV
5 Daihatsu Gran Max Pick-up Pick up

Yes, congratulations Ford, you don’t even offer a MPV in Indonesia. Minivan has a boring reputation in the US. Driving a minivan to pick up your date is a sure way to never getting a second date. The only people who buy a minivan are families with little kids. It’s spacious, easy to get in and out of, and it’s not much to look at.

So why is MPV the most popular type of vehicle in Indonesia? For one, most people who owns a car in Indonesia has a driver so the most important thing about a car is comfort not the driving experience. You wanna be able to stretch your legs and relax when you’re in a car and believe me, with the traffic in Jakarta, you can be in the car for much longer than you want. MPV gives you more passenger space and is higher off the road to better deal with potholes. MPV does not have a boring reputation in Indonesia, on the contrary, high end MPV like the Toyota Alphard is built with luxury comfort in mind. Instead, it’s the compact car that has a negative reputation. Car is more of a status symbol in Indonesia than it is in the US so driving a small car signals that you’re not rich. Also about that driver thing….imagine yourself picking up your date with your driver in a Ford Fiesta, fitting 3 people snugly within inches of each other, not exactly what I’ll call romantic. It can be a little awkward when you want to…you know, sit closer with your date.

Sometimes even corporations with tons of resources can suffer the same fate as startups. Ford has a great brand name and it’s sad to see them leave Indonesia.

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