General Motors is to slash production in economically troubled Russia and pull the Opel brand completely in the face of shrinking sales, AP reported Wednesday.
Mass-market GM brands have been among the biggest losers as Russia’s auto market shrinks, with sales of Chevrolet down 74 percent year on year in February and those of Opel plummeting 86 percent.
Opel will leave the Russian market, with Chevrolet production cut back significantly to focus on top-end products such as the Corvette sports car and Tahoe SUV.
In a statement, GM president Dan Ammann said the move “avoids significant investment into a market that has very challenging long-term prospects.” GM’s factory in St. Petersburg will “halt production by the middle of 2015,” the company said.
The ruble has lost nearly half its value against the dollar since the beginning of last year. Russia’s gross domestic product fell by 1.5% in January from the year-earlier period, and an important manufacturing index reached a five-and-a-half year low. Consumer price inflation hit 16.7 percent in February, with a 23.3 percent jump in food prices. Putin has warned of economic pain that could last as long as two years.
The result is the kind of economic uncertainty Russians haven’t seen since a brief period in 2008-09, and before that in the 1990s, when the Soviet Union’s collapse brought hyperinflation and financial collapse. European and American investors are growing wary. A top Bank of Russia official said Monday that the central bank was considering halting currency trading on the Moscow exchange in the event of excessive volatility.
