GM's Opel to cut output at two German plants over Russia

Monday, Jul 20, 2015

General Motors' Opel division said on Friday it will cut production at two German factories as it grapples with lost volume after exiting the plunging Russian market.

GM said in March it would idle its plant in St. Petersburg and wind down the Opel brand in Russia, whose economy has been hit by lower oil prices, a weaker currency and Western sanctions over the Ukraine crisis.

Opel, which had originally planned to sell over 80,000 cars in Russia this year, aims to shorten hours at its main plant in Ruesselsheim and at a site in Germany's eastern town of Eisenach.

"Inventories and related costs will be minimized with this step," the carmaker said, after first-half Russian sales plunged 73 percent to about 9,000 autos.

Opel said it will apply for subsidies under the German government's "Kurzarbeit" short-work program for about 25 working days in Eisenach and 15 days in Ruesselsheim, without being more specific.

The scheme allows companies to preserve jobs by reducing employees' hours when plant usage is low, with the government compensating workers for part of their lost wages.

However, Opel said it remains confident it will continue the growth trend of the past two years in 2015, after its pan-European first-half sales rose 3 percent to 582,300 autos.

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