Russia: GM reviews factory expansion plans image

The No.1 US automaker announced it has decided to put under additional scrutiny plans for the timing of a proposed expansion of their Russian St Petersburg factory.

The rethinking has been triggered by the latest slump in demand in the country, Europe’s second-biggest auto market. After sales dropped 5% in 2013, so far the situation has become critical during the first half of the year, with a local auto industry group predicting an overall drop of 12-13% for 2014.

“In view of the current business situation in Russia and the lower sales volumes since the start of the year, we are taking a close look at our plans. As part of this, we are also reviewing the timing of our expansion plans at the GM Auto Plant in St Petersburg,” said a GM’s spokesman.

Back in 2008, when the manufacturing facility was open, the carmaker envisioned a second stage expansion for 2015. During the first phase, the plant has been building the Chevrolet Cruze, Opel Astra, and Chevrolet Trailblazer cars.

According to data coming from the Moscow-based Association of European Businesses (AEB), the slump in demand in Russia is accelerating, after June’s sales dropped 17% and July’s deliveries fell 23%. Meanwhile, Chevrolet sales slid 45% and Opel deliveries slumped 25% in July.

Via Reuters