General Motors to invest $1bn in Russia over five year image

General Motors plans to invest $1 billion (778 million euros) in Russia in expansion and modernization of production capacities, news agency RIA Novosti reports.

Under plans, in the next five years GM is to grow annual production at its plant in St. Petersburg to 230,000 cars, while GM-AvtoVAZ JV in Togliatti, Samara region, is to make 120,000 cars annually.
“There is a lot of pent-up demand in Russia… The average vehicle is more than 10 years old,” the managing director of its Russian operations said.

The middle class is growing and nine of the 10 best-selling cars in Russia are foreign brands,” he said, adding that GM’s Chevrolet was a top-seller.

New car sales in Russia rose 39 percent in 2011 to 2.65 million units, according to a press release from the Moscow-based European business association AEB.

The most popular foreign brand was GM group’s Chevrolet, which sold 173,484 new cars, up 49 percent from 116,223 last year.

Another big winner was Volkswagen, whose Kaluga production plant hit full capacity, with round-the-clock production for the first time this year. The group, which includes the Volkswagen, Skoda and Audi brands, saw sales jump 74 percent. Volkswagen sales alone doubled, from 58,989 to 118,003 last year.

Sales crashed to 1.5 million in 2009 and have been recovering since. The market may now hit the much-vaunted 4-million mark “maybe in 2014, maybe by 2017,” an AEB representative said.

Car manufacturers are seeking to increase production in Russia to serve a market that may reach 4 million vehicles a year in 2015, according to the AEB.