General Motors, the largest US automaker, has announced it would move to suspend auto production at its St. Petersburg auto assembly factory in Russia from mid-March to mid-May.
The company has also said it would increase prices of the cars sold in the country due to the weak and volatile nature of the Russian ruble, which has been hit by a global slump in crude oil process and the economic sanctions imposed by western Nations over Russia’s implication in the political crisis in Ukraine. Additionally, Russia’s weak currency and suffering overall economy were also the main reasons why rival Ford Motor decided to decrease its expectations for the European unit this year. Also, larger rival Volkswagen AG was revealed by its labor boss to have lost hundreds of millions of euros in Russia. The St. Petersburg facility is GM’s lone fully-owned plant in Russia and the automaker also operates a joint-venture factory with local producer Avtovaz OAO. The plant shutdown was initially reported by the Russian daily newspaper Kommersant and a spokesperson for the company confirmed the story and the fact that GM raised prices to cope with the devalued currency.
According to figures compiled and reported by the Moscow-based Association of European Business, in 2014 the local operations of GM had seen deliveries dropping 26 percent to around 258,000 units. Overall, Russian new car sales dropped 10.3 percent last year and are forecasted to crash 24 percent this year, said the same industry group.