Russia: General Motors to refocus on premium autos image

The largest US automaker and the third biggest in the world recently announced it would shutter a Russian factory this summer and slow down the Opel brand by the year’s end, instead focusing on delivering to the slowing market luxury cars.

The company announced on Wednesday it would incur a $600 million charge this quarter in relation to the restructuring of the Russian business unit – in a bid to narrow losses in a market that has undergone a massive collapse. The Russian retrenchment follows other GM moves across the loss-making emerging markets, with the US carmaker in February announcing it would also close a plant in Indonesia and wind down its operations in Thailand. The strategy repositioning on the Russian markets practically ends production of Opel and Chevrolet cars on the market, save for the jointly built current generation of Chevrolet Niva sport utility vehicles – produced in cooperation with joint venture partner Avtovaz OAO. “This decision avoids significant investment into a market that has very challenging long-term prospects,” commented in a statement GM President Dan Ammann.

Instead, on the Russian market GM’s refocus will target the premium segment, which was less market by the overall slump. The company will push forward its Cadillac luxury brand and also bring some Chevrolet models produced in the US. Back in 2013, when the current crisis was in its incipient faze, Russia was responsible for 2.6 percent of GM’s worldwide sales – the figure shrunk to 1.9 percent last year. Almost half a decade ago, the US carmaker called Russia “an important strategic market” and was ready to expand local production capacity to 350,000 units annually.

Via Reuters