TM Toyota Motor Corporation

TOKYO—Ford Motor Co. will cease all operations in Indonesia and Japan by the end of 2016 because it doesn't expect to achieve sustainable profitability in the two markets, the auto maker said Monday.

Ford, the second-largest auto maker in the U.S.—which has a 0.1% market share in Japan and a 0.6% market share in Indonesia—will close all offices and dealerships in the two countries, spokeswoman Karen Hampton said.

"It has become clear that there is no path to sustained profitability, nor will there be an acceptable return over time from our investments in Japan or Indonesia," Ford spokesman Neal McCarthy said, adding that Asia Pacific President Dave Schoch notified all employees in the region on Monday about the decision by email.

Ford's move highlights U.S. car makers' struggle to make significant inroads in major Asian auto markets dominated by Japanese auto makers including Toyota Motor Corp.

In Japan, domestic brands account for more than 90% of the new-vehicle market. Ford, which has been selling cars in Japan for more than four decades, sold 5,000 vehicles there in 2015.

Auto demand in Japan, facing an aging and shrinking population, is expected to decline in the coming years and Ford's chances for success are shrinking, Ms. Hampton said. Ford has 52 dealership outlets and 292 employees in Japan, she said.

In 2002, Ford started selling vehicles in Indonesia, Southeast Asia's most-populous country, where Japanese auto makers hold about 90% of market share. But it had no local production and didn't offer vehicles in popular segments such as multipurpose vans, Ms. Hampton said. Ford's retail sales in Indonesia fell to 6,103 vehicles last year from 11,614 in 2014. Ford has 44 outlets in Indonesia and 35 employees there, Ms. Hampton said.

Ford's move comes as some auto makers are revamping struggling operations in the region. Last year, General Motors Co. decided to shut its Indonesian assembly plant and shifted its strategy, teaming up with a Chinese joint-venture partner, SAIC Motor Corp., to build and sell minivans there.

Auto makers, including Ford, are also making sure they have enough resources to meet tighter emissions regulations and expand into new business fields such as autonomous cars.

The Asia-Pacific region will continue to be a significant region for Ford, which sells around 6 million vehicles a year world-wide, Ms. Hampton said. In China, the world's biggest auto market, Ford sold 1.1 million vehicles in 2015, up 3% from a year ago, she said.

Ben Otto contributed to this article.

Write to Yoko Kubota at yoko.kubota@wsj.com

(END) Dow Jones Newswires

January 25, 2016 07:35 ET (12:35 GMT)

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