General Motors on Wednesday (18 March) said it would “change its business model in Russia” by axing Opel (as it recently did in Australia), scaling down Chevrolet (in the process of being all but withdrawn in Europe) to premium US-made models and closing two assembly operations.
“GM will focus on the premium segment of the Russian market with Cadillac and US-built iconic Chevrolet products such as the Corvette, Camaro and Tahoe. The Chevrolet brand will minimise its presence in Russia and the Opel brand will leave the market by December 2015,” the automaker said in a statement.
Go deeper with GlobalData
The GM Auto plant in St Petersburg will halt production by the middle of 2015 and be idled. Contract assembly of Chevrolets at GAZ will also end this year.
Opel Group CEO Karl-Thomas Neumann said, “We do not have the appropriate localisation [local content] level for important vehicles built in Russia and the market environment does not justify a major investment to further localise.”
“This change in our business model in Russia is part of our global strategy to ensure long-term sustainability in markets where we operate,” said GM president Dan Ammann. “This decision avoids significant investment into a market that has very challenging long-term prospects.”
However, the GM-AVTOVAZ joint venture will continue to build and market the current generation Chevrolet Niva.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataGM said Cadillac would be “set up for growth in Russia over the next several years as it prepares for numerous product introductions”.
Chevrolet and Opel would work with dealer networks in Russia to plan future steps while ensuring warranty and other obligations to existing customers were honoured in future.
“We can assure our customers that we will continue to provide warranty, parts and services for their Chevrolet and Opel vehicles,” said Neumann.
“We had to take decisive action in Russia to protect our business. We confirm our outlook to return the European business to profitability in 2016 and stick to our long term goals as defined in our DRIVE!2022 strategy.”
By 2022, the company plans to raise its market share in total Europe to eight percent and to reach a profit margin of five percent.
As a result of the Russia decision, GM expects to record net special charges of up to approximately US$600m primarily in this first quarter. The special charges include sales incentives, dealer restructuring, contract cancellations and severance related costs. Approximately $200m of the net special charges will be non cash expenses.
RUSSIA: Nissan halts St Petersburg production
Geneva blog: Opel/Vauxhall’s chief gets delightfully candid
