GM Withdrawing Chevrolet And Opel From Russia
GM is set to significantly reduce operations in Russia, as the once promising auto market suffers under the weight of economic uncertainty and a difficult regulatory regime.
According to the Wall Street Journal
Global auto makers have long placed a bet on Russia as a top emerging market, but car companies are saddled with high production commitments under a regulatory scheme implemented earlier in the decade. Faced with a litany of demands on its capital and little indication Russia will turn around, GM executives decided the company’s money is better spent elsewhere.
As part of the plan, Opel will be withdrawn from the Russian market, while Chevrolet’s offerings will be drastically reduced. Chevrolet and Cadillac products exported from America, like the Corvette and Escalade, will continue to be offered. While production of the Chevrolet Niva will continue with JV partner AvtoVaz, GM’s plant in St.Petersburg will be idled idefinitely, putting 1,000 people out of work. GM will take a $600 million charge related to the events in Russia.
More by Derek Kreindler
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So how soon should we expect GM's Russian executives to be shot on a bridge? #Gangsta_Putin
What should they have expected? You flood a massive but limited market with nearly every car made and expect to maintain improbable sales volumes once that market gets saturated? Russia's market is going to fall flat for at least a year, maybe two, before volume rises again to a sustainable state. Expecting anything more is setting yourself up for failure.
Well, it's taken GM longer to get its assets out of Putin's Empire, as it were, than it took the merry band of oligarchs themselves, who know which side of their slice of bread is butter up.
Not sure if this is the right strategy. Russian market right now is tough but agree with Ghosn that in long term it´s going to be big market. GM was pretty big in Russia, established relatively soon, Chevrolet brand used to be i think biggest or 2nd biggest foreign brand, so top 3 regularly. Opel was also doing fine, mid tier brand with exports from Germany. GM has JV with Avtovaz for Niva assembly. Now they want all mass market vehicles to stop producing, importing... with selling only iconic models - o.k exports of Cadillacs and Corvettes and US styled CHevy SUV´s with costly tariffs. I think they will regret this in future. Also OPEL somehow survived that EUR crisis, just like PSA, FIAT and now they want their already small restricted global area to make even smaller... doesn´t make much sense for OPEL. thanks to this decision Ghosn´s plans about market share in Russia have become more real, also Hyundai/Kia might use this chance to boost their share