GM to suspend St. Petersburg output as Russia ruble weakens

Article by Christian Andrei, on February 2, 2015

General Motors will temporarily stop output at its St. Petersburg assembly site in Russia from mid-March to mid-May and is hiking product prices due to the weak Russian ruble that is eating its profits. The site is home to the Russian production of the Opel Astra and Chevrolet Cruze, according to the Automotive News Europe Guild to Assembly Plants in Europe.

The St. Petersburg site is the only plant that GM fully owns in Russia. GM also operates a joint-venture site in Russia with AvtoVAZ. GM has already raised prices for its vehicles sold in Russia due to the currency, a spokesman for GM Europe said. He, however, could not confirm a report by Kommersant that prices have surged an average of 20 percent in the last two months.

In 2014, GM saw its sales in Russia decline 26 percent to about 258,000 vehicles, according to data from the Association of European Business (AEB) – sharper than the 10-percent drop posted by the industry to 2.49 million.

AEB expects auto sales to further dive this year to 1.89 million, a figure regarded as too optimistic by many carmakers. Another American carmaker, Ford Motor, has lowered its forecast for its European operations this year, citing the weak Russian ruble and economy as major culprits.

Ford had expected its losses in Europe to drop from $1 billion in 2014 to $250 million this year. But the situation in Russia prompted Ford to expected losses more than $250 million.

"We expect to see a big headwind from Russia in 2015," Chief Financial Officer Bob Shanks. He said that they expect the overall vehicle in sales in Russia to be at sub-2 million units.

Topics: gm, russia, production

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