What's Bad For Russia Is Bad For GM

Bertel Schmitt
by Bertel Schmitt

Car sales in Russia disappointed a month ago, and they disappoint again: Russian sales of new cars and light commercial vehicles dropped 11 percent in June, says Reuters. For the first half of the year, sales are off 6 percent while Russia caught a whiff of the European contagion. Now, all hopes are on the government and cheap credit.

Russians bought 241,346 cars in June, 31,254 fewer than in the same month last year. So far in 2013, 1.33 million cars and light commercial vehicles have been sold in Russia, down from 1.42 million at the same point last year. Last month, plans that had called for nearly 3 million cars for 2013 were trimmed down to 2.8 million. Plans for Russia to overtake Germany as Europe’s biggest car market were postponed for another year.

The news isn’t good for GM, which did bet big on an expanding Russian market to lessen the pain in Western Europe. Ford , Renault and Fiat also are invested heavily in Russia.

Now, everybody is waiting for miracles, performed by the government. It is expected to announce plans to subsidize credit-backed vehicle purchases.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Mike978 Mike978 on Jul 08, 2013

    Didn`t every major company bet on Russia (and other large emerging markets like Brazil, Indonesia etc)? So this sounds like bad news for them all, unless GM is under performing the market.

    • Hf_auto Hf_auto on Jul 08, 2013

      Yes, but this headline better fits the GM bashing template. I apreciate candor and have no love for GM, but this is getting old and affecting credibility in my eyes.

  • Namesakeone Namesakeone on Jul 08, 2013

    Surprise, surprise. A country where only the top one percent has any substantial money, and the other 99% aren't buying new cars. Who was the marketing genius behind this again?

    • See 1 previous
    • Onus Onus on Jul 08, 2013

      True on the income share. But, plenty of normal people buying cars whether or not they have money.

  • SixDucks SixDucks on Jul 09, 2013

    How about VW, they had made some significant investments in Russia. And what is it with this Schmitt character and GM anyway? Did he get run over by a yokel in an Opel as a child? Couldn't get financing for a new Manta Luxus?

    • Doctor olds Doctor olds on Jul 09, 2013

      @SixDucks- All the majors made significant investments in Russia, though the GM investment is an incredibly tiny share of their global investments, over $9B just in American capital improvements since bankruptcy.