Russia: Opel to slowdown car output image

The country’s economic troubles and political tensions, coupled with sanctions imposed by the Western nations have weighed down on consumer confidence and the auto market has been severely hit.

Following other global automakers – including Ford and Renault’s subsidiary AvtoVaz – the Opel Group has decided to reduce car output and also fire 500 employees in Russia. The European unit of US giant General Motors has decided to take the cost cutting measures as the Russian economy is impacted by a weak local currency, a huge slump in local car demand and looming prospects from the economic sanctions imposed by the European Union and the US.

Opel announced that its local Russian plant in St. Petersburg – in charge with the manufacture of the Opel Astra and Chevrolet Cruze compact cars – will move down from two shifts per day to just one.

“Demand has been in free fall recently, none of the carmakers producing in Russia will be able to escape output cuts,” said Tatiana Hristova, analyst at market research firm IHS Automotive.

“Russia was our third-biggest market last year after the UK and Germany,” Opel Chief Executive Karl-Thomas Neumann said. “At the moment, this market is locked into severe turbulences.”

According to IHS Automotive predictions, the Russian auto market could see sales dipping 14% through the year, reaching just 2.4 million vehicles. Sales in 2015 would also fall, although slower, declining 6.5% to just 2.24 million units.

Via Reuters