GM reviews timing of Russian site expansion due to lagging market

Article by Christian A., on August 25, 2014

Due to a slump in the auto market in Russia, General Motors Co. is reviewing the timing of the expansion of its site near St Petersburg. GM opened the site -- which builds the Chevrolet Cruze, Opel Astra, and Chevrolet Trailblazer models -- in 2008 and intended to launch the second stage in 2015.

A GM spokesman said the carmaker is taking a close at its plans, given current business situation in Russia and the lower sales since the start of 2014. In 2012, GM presented plans to increase the site’s annual production capacity to 230,000 vehicles by 2015.

GM recently said it was to cut output at the site to four days a month in August and September, as well as eight days in October. Carmakers have seen their sales in Russia as the country’s economic growth slowed down, which has prompted consumers to delay or cancel large purchases.

They saw their car and light-vehicle sales dive 10 percent in the first seven months of 2014 to 1.41 million units, including a 23-percent drop in July. Chevrolet posted a 23-percent drop in deliveries in the January-July period to 73,749 vehicles, while sales by Opel logged a 17-percent dip in sales to 38,440 cars, according to figures compiled by the Association of European Businesses in Russia.

Other carmakers are also reducing their production in Russia and are even lowering their forecasts. Ford has written down its entire $329-million investment in a joint venture with Sollers after unveiling plans in April to cut 950 jobs at two of the JV’s plants. [source: Reuters.com]

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Topics: gm, russia, sales

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