Europe: Opel lowering production rates at two German factories image

General Motors European arm Opel has announced it would cut output at a couple of manufacturing facilities in Germany as it struggles to deal with the loss of sales following the recent exit from the plummeting Russian market.

General Motors decided this March to stop production at the manufacturing facility it owns in Saint Petersburg and then abandon the Russian market from the Opel brand’s point of view because of the country’s plunging economy that led to an auto sales dive. Russia, one of the fastest growing emerging markets a few years ago, was deeply hit by Western sanctions over its political and military involvement in the Ukraine crisis, followed by a slowing economy and an impact from crumbling oil prices. Opel initially envisioned sales of at least 80,000 vehicles for the entire year in Russia, but now announced it would reduce working hours at its main facility in Ruesselsheim and at a site in Germany’s eastern town of Eisenach. “Inventories and related costs will be minimised with this step,” said the company in a statement, with Russian deliveries dropping 73 percent to around 9,000 units after the first six months of the year.

The plants impacted by the decision to cut production mostly handled the build of Adam and Insignia models, cars usually attracting western European customers. Opel added the situation across the continent was only “moderately” developing, though the company reiterated its belief the sales would continue to grow throughout the year, after posting six-months results of 582,300 vehicles, an increase of three percent over the same period last year.

Via Reuters