General Motors Co. (GM), facing continued losses in Western Europe plans to close the Bochum plant in Germany Bochum, but on the same time the company is more than doubling capacity at a factory in St. Petersburg that will make the new Opel Astra sedan as the Russian auto market rebounds.
“Opel needs to adjust its business in a way that enables profitability even in difficult market conditions,” Opel Chief Executive Karl-Friedrich Stracke said in a statement.
GM is introducing 12 new vehicles in Russia this year after increasing combined Chevrolet, Opel and Cadillac sales in the country by 53 percent last year to 244,000.
GM broke ground on Friday on its expansion of GM Auto, its plant in St. Petersburg, that will result in annual production capacity more than doubling to 230,000 vehicles from 98,000 now.
On completion, expected by 2015, employment there would increase to 4,000 people from 2,500 now.
Akerson was in Russia on a three-day visit that included speaking at the St. Petersburg International Economic Forum. He was joined by the Russian Federal Deputy Minister Alexei Rakhmanov, U.S. Ambassador to Russia Michael McFaul and former U.S. Secretary of State Henry Kissinger at the expansion announcement.
Opel in Germany
Opel said its Bochum plant would not get further production allotted to it after the end of the life cycle of the Zafira Tourer now made there. The company did not say when Zafira production might end – but most probably 2016.
Russian vehicle market
Auto companies sold 1.14 million vehicles in Russia in the first five months of the year, up 15% from a year earlier, according to the Association of European Businesses’ Automobile Manufacturers Committee.
GM sold 74,788 Chevrolets in Russia in the first five months of the year, up 18%, and 32,190 Opels, up 34%.
GM has lost money in Europe in the past 12 years, including $747 million last year, and has said the losses could continue for another two years.
In its bid to bring down costs in Europe, GM has agreed to an alliance with PSA Peugeot Citroen that the two companies hope will lead to at least $2 billion in annual savings from shared purchasing, logistics and the joint development and production of vehicles and parts.