By on March 18, 2015

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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As part of the plan, Opel will be withdrawn from the Russian market, while Chevrolet’s offerings will be drastically reduced.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.

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63 Comments on “GM Withdrawing Chevrolet And Opel From Russia...”


  • avatar
    Lie2me

    “Chevrolet and Cadillac products exported from America, like the Corvette and Escalade, will continue to be offered”

    So, what do these cars cost in Russia a billion Rubles?

    • 0 avatar
      Onus

      A couple million.

    • 0 avatar
      Manic

      Both cadillac.ru and dealersite http://avto-city.ru/auto/cadillac/
      say starting price for 2015 Escalade is 4340000 rur = 70900 usd.

      • 0 avatar
        28-Cars-Later

        Nice. Attention Deadweight, the Zohan apparently was offering reasonably priced Cadillacs in Moscow (except for maybe ATS) although this was probably due to favorable currency conversion and not a strategy.

        ATS: $34261.78
        CTS: $42520.58
        CTS Coupe: $32953.45
        SRX: $35144.90

        I also enjoyed this tidbit from the translated text:

        “Cadillac is equipped with a powerful suspension system that easily withstands ride on Russian roads, effectively absorbs vibrations and provides softness and highest comfort. Even on long journeys Cadillac passengers to relax and rest.”

        More models:

        Tahoe LT 6.2: $56632.13
        Tahoe LTZ 6.2: $62377.42

        Cruze LT “KDF1” 1.8: $15380.96 (top LT trim)
        Cruze LTZ “GAF2” 1.4T: $17186.62

        Camaro 2LT 3.6: $64018.93
        Camaro 2SS 6.2: $75509.51

  • avatar
    lacy1

    Cutting their losses makes sense to me, no need to waste the resources. On a side note, whatever that truck is in the picture is kinda slick and needs to be at dealers here assuming it isn’t crap underneath the sheet metal.

    • 0 avatar
      Lie2me

      I like it too, but apparently it’s a piece of crap designed for 3rd world markets

    • 0 avatar
      CoreyDL

      That’s the Niva I believe. And is the modern form of the former Lada Niva.

      • 0 avatar
        RobertRyan

        Correct,
        That was probably the first SUV made anywhere

        • 0 avatar
          Lie2me

          Nope! The first UNIBODY SUV, but hardly the first SUV

          • 0 avatar
            NoGoYo

            I thought the Chevrolet Suburban was the first SUV.

          • 0 avatar
            gtemnykh

            It was a very innovative design for 1977, when it first saw production: full-time 4wd that can be driven on dry pavement, with independent front suspension (double wishbone), on a unibody platform. Locking center diff and low range transfer case, together with low weight and good geometry (short wheelbase, awesome approach/departure angles) make the Niva quite a billygoat. Even the large (for the time) 16 inch steel wheels with narrow mud tires are a very efficient and effective choice for offroad driving.

          • 0 avatar

            How much of that is real innovation? A 4×4 Panda would surely have it all. Now, have no idea when then 4×4 Panda was introduced and not taking away from the Niva, but by God was that a “difficult” car to love, especially, but not only, as a DD.

          • 0 avatar
            gtemnykh

            Marcelo, it was innovation for the very fact that it was the first vehicle to do so. And to come from the stodgy Soviet Union, land of stolen German blueprints and licensed 1960s Fiats, it was a real breakthrough. The fact that they accomplished this using mostly existing Lada parts is even more incredible. There were some very bright and resourceful engineers working on the Niva. I agree that they have their share of typical Soviet/Russian car issues, but I still think they’re great. They sell them now as “Lada 4x4M,” M standing for ‘modernized,’ driveshaft u joint replaced with a CV joint for reduced NVH, much improved suspension tuning for greater high speed stability over rough terrain, and improved fuel injection. Thankfully it is still true to form aesthetically, as well as in terms of capability.

          • 0 avatar

            Oh, don’t worry, I’m not taking away from Soviet engineering, but…The car was good to start with and I have driven a few. Just let’s recognize them as they should be.

          • 0 avatar
            RobertRyan

            @NoGoYo
            A SUV has to go Off Road or be capable of it, a Suburban was woeful at doing that

          • 0 avatar
            RobertRyan

            No it precedes the crossover SUV, I guess the LandRover unlike the Jeep was the first true SUV

            “It was the first mass production off-road vehicle to feature a unibody architecture, independent front suspension with coil springs, and is a predecessor to current crossover SUVs”

          • 0 avatar
            Lie2me

            The first unibody crossover SUV, but NOT the first SUV.

          • 0 avatar
            Vulpine

            The Suburban was a wagon–admittedly a truck-based wagon, but only a wagon nonetheless. I could acknowledge the Land Rover, but even there I’d go older than the unibody/coil springs version to really the originals which were based on the Willys chassis and bore the first fully enclosed body on one. Granted, even then they were more agricultural vehicles, but they pretty much set the pattern for later types, including the CJ Jeeps.

    • 0 avatar
      johnny_5.0

      It looks awesomely Tango & Cash. You’d have to get it with an automatic so you could steer with your right arm and aim the side mounted Gatling gun through the driver’s window with your left.

  • avatar
    Onus

    This is stupid. GM products are quite popular in Russia.

    Products like the Cruze are a dime a dozen and they are ending production of it. Seems smart to me.

    GM has one of the smallest exposures to local production. Mostly they contract out work. They have been very slow compared to other companies in getting local production going. My guess is they are throwing in the towel since they failed to do what they should have done couple years ago like the other automakers like Renault Nissan, Ford, VM, and others were doing, invest. The above are already using high percentages of localized parts. As such there exposure to currency fluctuations are very low. It also lowers their labor costs.

    • 0 avatar
      Pch101

      There is a guy named Vladimir Putin who throws a wrench or six into the works.

      • 0 avatar

        But Putin won’t last forever and being in a market like that pays over the long run. Akin to the Indonesia pull out reported here a few days ago. Smart short and maybe even mid term but bad over the long run. Makes Wall Street happy and long term industrial strategy gets hampered. American makes always suffer from this.

        • 0 avatar
          Pch101

          Russia is an ongoing basketcase. Building and maintaining valuable assets there is just a recipe for having them seized.

          • 0 avatar

            True, but I’m not recommending building, I’m saying they should weather it. Keep a presence.

          • 0 avatar
            Pch101

            It’s a bleeder in a kleptocracy.

            The Russian car market is falling apart, as are the political and economic systems in which it operates. Westerners who venture in get bled time and time again because they can’t negotiate their way through that kind of mess.

        • 0 avatar
          Onus

          Spot on Marcelo. My thoughts exactly.

          • 0 avatar
            Pch101

            Are you not following the news coming out of Russia?

          • 0 avatar
            Onus

            PCH101,

            I’m sure most Russian’s will be fine. Most Russians i know have decent amounts of disposable income, and no rent or mortgage to pay, and unemployment is comparable to ours.

            The reason they are not buying cars is that food has gotten more expensive due to Russia banning western food imports, and interest rates having gone through the roof, and sanctions limiting banks access to western financing.

          • 0 avatar
            Pch101

            So as I suspected, you don’t follow the news coming out of Russia.

            Type “Rotenberg law” into Google. Put that into the context of the invasion of Ukraine, the shootdown of MH17, Putin’s various recent acts of military intimidation in Europe and now the assassination of Boris Nemtsov.

            Not a great country to do business in, particularly when the Duma is openly contemplating the theft of western assets. Westerners with more greed than sense have been ripped off in Russia before because they ignored the fact that doing business in Russia is not like doing business at home — Putin is an authoritarian leader with czarist/ Soviet inclinations and he doesn’t play by the rules.

          • 0 avatar
            Onus

            I know of all of these things. But this all didn’t happen overnight. This has been the state of things for a decade. As they say the more things change the more they stay the same. Russia has been authoritarian for centuries.

  • avatar
    NN

    not long ago, Cruze was one of the top selling cars in the hot Russian market. I guess they’re not completely throwing in the towel on the brand, not if the Niva is still offered (which I’m sure wouldn’t meet any 1st world safety standards). I understand shutting production, but why not still import Cruze’s from China or Korea, even if the #’s are small due to the economy? The dealers/brand infrastructure is already there, and someday will come back.

    • 0 avatar
      Onus

      Import tariffs are super high in Russia on new cars, even higher on used cars.

      On top of that there is a crazy recycling fee that is applied to all cars but refunded to locally produced products. This was instituted as when Russia joined WTO they had to reduce tariffs, and the recycling fee is not technically a tariff.

      • 0 avatar
        Sjalabais

        How does the recycling fee work? Private parties have to pay a lot to doscard a car? I’d assume, this being Russia, that abandoned cars line roads and fill lakes? Lots of garbage on autonavigator.ru and the like…

        • 0 avatar
          Onus

          The automaker pays it as a percentage of the value of the car. They created this so that they can develop recycling for cars. As you noticed they don’t really have anything in place right now.

          But, it is really used as a non tariff barrier as local producers no matter the brand get a refund of this fee if i remember correctly.

  • avatar
    CoreyDL

    China would seem a good production location for RDM cars. Not too far to ship them over there.

    Or, you know, Russia could become more reasonable. #nahgonnahappen

    • 0 avatar
      gtemnykh

      No, the Chinese tariffs are every bit as restrictive to imports as Russian ones are. In fact, most Chinese manufacturers on the Russian market assemble via knock down kits in Russian “factories.” The most popular and well regarded vehicle seems to be the Great Wall “Hover” a copy of the old Isuzu Axiom (which is a restyled Rodeo whose roots date back to the 1992 truck). Most have ancient Mitsubishi derived 4 cylinder engines and 5spd manuals, with part time 4wd. Not bad trucklets for the locale, let down by poor paint/plastic quality.

      Honestly, I’d love to have the UAZ Patriot available for sale here. Horrid quality, particularly of engine accessories, but for the price of a basic Versa you get a roomy BOF midsize SUV with solid axles at both ends, standard 5spd manual, an optional diesel engine, and unlimited modification potential. Think of it as a roomier XJ Cherokee with a frame and reliability similar to a Cherokee with 200k miles.

      • 0 avatar
        CoreyDL

        I’m going to purchase a Hover Pi.

        http://en.wikipedia.org/wiki/Great_Wall_Haval_H3#/media/File:Great_Wall_Hover_P_G1.jpg

      • 0 avatar
        CoreyDL

        PS. I really liked the styling on the Axiom, and I don’t think it looks outdated even today. But I never recall reading one positive review about it.

      • 0 avatar
        Sjalabais

        The new price on the Patriot and UAZ vans is temptingly low.

        • 0 avatar
          gtemnykh

          Again, you have to wrap your mind around just how terrible the build quality is on stuff coming out of Ulyanovsk. You buy one simply assuming that you will have to replace just about everything under the hood within a few short years: radiators, alternators, thermostats, fan clutches, water pumps. Going through the dealer for repairs will have you without a car for weeks at a time, only to get another inferior replacement part. The people that are happiest owning Patriots and 452/469 just assume that they’ll have to rebuild the car themselves. The silver lining to this scary sounding picture is that replacement parts are dirt cheap and everywhere, and that these are incredibly primitive and easy to work on vehicles. While you’re in there repairing things, it’s very easy and affordable to put on an aftermarket locking diff, beefy steel bumpers and a lift, etc. It’s not for everyone, but for the guy willing to wrench on his own stuff and who likes offroading, it’s a very fetching option.

  • avatar
    John R

    So how soon should we expect GM’s Russian executives to be shot on a bridge? #Gangsta_Putin

  • avatar
    Vulpine

    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.

  • avatar
    wmba

    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.

  • avatar
    romismak

    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

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