General Motors to pull Opel out from Russia

Article by Christian A., on March 23, 2015

General Motors has unveiled its strategy to offset the effects of the current crisis in Russia to its operations in the country. Its Opel division will exit Russia, shutting down its site in St. Petersburg by the end of 2015. Likewise, Chevrolet will scale back its presence in Russia, selling only “iconic” US-made models like the Corvette, Camaro and Tahoe.

GM will concentrate on selling premium Chevrolet and Cadillac vehicles in Russia. GM president Dan Ammann said in a statement that the change is part of the carmaker’s global strategy to ensure long-term sustainability in markets where it operates. He said that the decision avoids significant investment into a market that has “very challenging” long-term prospects.

Opel Group chief executive Karl-Thomas Neumann remarked they still expect a return to profitability next year and will stick to its long-term goals as defined in its DRIVE!2022 strategy. The carmaker expects to record up to around $600 million in net special charges -- including sales incentives, dealer restructuring, contract cancellations and severance-related costs -- primarily in the first quarter of 2015.

About $200 million of the net special charges will be non-cash expenses. RBC Capital analyst Joseph Spak said in a recent note to investors that he views GM’s move as “a near-to-mid-term positive but potentially a longer-term negative.”

He noted that the Russian market is plagued with a number of challenges like regulatory pressures, economic uncertainty and the low number of local suppliers.

He remarked that the plan to withdraw Opel and most of its Chevrolet models from Russia could help GM achieve a goal of turning a profit in next year. Moreover, Joseph Spak noted that GM’s move is “in stark contrast to Ford,” which continues to view Russia as possible the next largest market in Europe. He estimates Chevrolet controlling about 5 percent of the Russian car market with Opel just having has a 3-percent share.

Topics: gm, opel, russia

If you liked the article, share on:

Comments

Recommended

Not so long ago, the 2018 Genesis G80 Sport made its debut at the 2016 LA Auto Show. But at that time, it did not have a price yet. And...
by - April 23, 2017
It seems like an increase in price has become a trend for automotive companies lately. Genesis isn’t alone when it comes to this. Subaru had just announced that the 2018...
by - April 23, 2017
Imagine a sports car morphing into an SUV. Chevrolet initially revealed the FNR Concept at the previous Shanghai Auto Show in 2015. For this year, Chevy once again graces the...
by - April 22, 2017
From the moment FCA kicked off with its 3-month-long ad campaign until the day it unveiled the new Dodge Challenger SRT Demon, folks have been guessing what the exact figures...
by - April 22, 2017
Some people may think Audi Sport is a new company but it is in fact the motorsport division of Audi combined with the best of what Quattro GmbH can offer....
by - April 21, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries