GM announces reduction in Russian car production

Automobile industry reacts to weakening economy due to Ukraine conflict

General Motors and other car manufacturers are reducing production due to economic impact of Ukraine conflict. Photograph: Reuters

General Motors and other car manufacturers are reducing production due to economic impact of Ukraine conflict. Photograph: Reuters

 

General Motors, the world’s second-biggest carmaker, is cutting production in Russia as deliveries drop amid a weakening economy stemming from the government’s conflict with Ukraine.

GM halted carmaking at its plant in St Petersburg as of today until Sepember. 12th and plans three further suspensions, Nico Schmidt, a spokesman for the carmaker in Ruesselsheim, Germany, said.

The Detroit-based manufacturer will only build cars in Russia for four days in September and eight days in October.

Russia’s dispute with Ukraine has prompted US and EU trade sanctions, contributing to a decline in the ruble and the possibility of a recession.

Seven-month car and light-vehicle sales dropped 9.9 per cent, including a 23 percent plunge in July.

Western automakers, which have invested in a country that’s soon expected to pass Germany as Europe’s biggest car market, are reducing production and lowering forecasts.

Ford wrote down its entire $329 million investment in its Russian joint venture with OAO Sollers in the second quarter after outlining plans in April to eliminate 950 positions at two of the partnership’s plants.

Renault, which shares control of OAO AvtoVAZ, Russia’s largest carmaker, said last month that the full-year contraction in the country’s auto market may exceed a predicted 10 per cent drop.

Seven-month deliveries by GM’s Chevrolet brand plunged 23 per cent from a year earlier to 73,749 vehicles, while sales by GM’s Opel division dropped 17 pe cent to 38,440 cars, according to figures compiled by the Association of European Businesses in Russia.

That contrasts with GM’s plans laid out in 2012 to raise annual production capacity in St. Petersburg to 230,000 vehicles by next year.

Bloomberg