9:45 am, March 19, 2015
A DRASTIC drop in Russian car sales as a result of economic downturn in the country has prompted General Motors to pull Opel from sale and cut back Chevrolet production.
Russia saw a 10.4 per cent drop in car sales last year and between January and February this year figures have dropped a further 32.3 per cent.
Opel suffered even more than this, seeing its sales drop by 20 per cent last year, and GM’s other brands fell by 12.5 per cent. In February of this year Opel’s sales were down 86 per cent year-on-year in Russia and Chevrolet has also seen sales drop by 74 per cent in the same period.
The US car giant has said it will focus on its top end products, such as Cadillacs, Chevrolet Corvettes and Camaros, and Tahoe sports utility vehicles. It also announced that the GM Auto plant in St. Petersburg would halt production by mid 2015.
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.’
Opel chief executive Karl-Thomas Neumann said: ‘We had to take decisive action in Russia to protect our business.’
He added: ‘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.’
GM has said it expects to record $600 million (£409 million) in one-off losses, primarily in the first quarter of 2015. The special charges include sales incentives, dealer restructuring, contract cancellations and severance-related costs.
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