NEWS

GM to pull Opel out of Russia and cut back Chevrolet production

Friday, Mar 20, 2015

US car giant General Motors is to pull its Opel brand in Russia after plummeting sales, and significantly cut back Chevrolet production.

GM will focus on selling top-end products in Russia such as Cadillacs, Corvette and Camaro sports cars, and Tahoe sports utility vehicles.

Mainstream GM brands have suffered as Russia's car market has shrunk.

The company said it would mothball its St Petersburg factory by the middle of the year.

"There may be severance" for the 1,000 employees, and there was no current plan to restart production in the future, GM spokesman Dave Roman said.

GM president Dan Ammann said: "This change in our business model in Russia is part of our global strategy to ensure long-term sustainability in markets where we operate.

"This decision avoids significant investment into a market that has very challenging long-term prospects," he added.

Opel will leave the Russian market by December.

Opel chief executive Karl-Thomas Neumann said: "We do not have the appropriate localisation level for important vehicles built in Russia and the market environment does not justify a major investment to further localise."

Chevrolet will sever its production deal with car-maker Gaz, but its joint venture with Avtovaz will continue to build and market the Chevrolet Niva.

GM would continue to honour Opel and Chevrolet warranties and provide parts and services, it said.

In February, Opel sales plunged 86% in Russia compared with the year before, while Chevrolet saw a 74% drop.

The move was likely to result in about $600m (£409m) in one-off losses, around a third of which would be non-cash expenses, GM said.

 

bbc.com

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