GM is closing its Russia factory

GM is closing its Russia factory

RusAutoNews.Com – GM chairman Dan Ammann has announced the planned closure of the St. Petersburg factory in mid-2015. The company will also discontinue the contracted production at Nizhni-Novgorod GAZ facilities. GM had ended production in Avtotor in February.

Production has already been stopped at St. Petersburg GM factory. The factory will only make SKD production until the middle of the year. The operations will cease completely afterwards.

The company will continue with Chevrolet Niva production at GM-AVTOVAZ plant in Togliatti. However, the preparations for the production of the new Niva have been stopped in Togliatti as well.

Thereby, GM has pulled out of the industrial assembly regime agreement signed with the Russian government in 2005. The agreement enabled customs-free import of components, in return for maintaining a certain amount of production.

From now on, GM will only focus on the sales of the premium brands Cadillac and Corvette and Chevrolet models, such as Camaro and Tahoe in Russia. GM affiliate Opel, on the other hand, will suspend all its Russia sales until December 2015.

Opel Group general director Karl-Thomas Neumann has made the following statement: “The localisation rate of the automobiles we manufacture in Russia is not sufficient. The market conditions, on the other hand, require serious investments, in order to increase the localisation rates.” The localisation rate at St. Petersburg GM factory has not been announced.

GM Group has sold 189,500 vehicles in Russia in 2014, following a 26.4% year-on-year decline. The brands belonging to the Group have only managed to sell 8362 vehicles within the first two months of the year (-74.6%).