Downturn to see GM shut Russia car factory

General Motors will shut its Russian factory and wind down its Opel brand in the country to try to survive a deepening downturn in the auto market, the US carmaker said yesterday.

After several years of growth in excess of 10 per cent, car sales in Russia shrank in 2014 as the economy weakened because of Western sanctions over the Ukraine crisis and a slide in oil prices.

The rouble also tumbled last year, forcing consumers to put off large purchases and manufacturers to find ways to cut costs.

The US carmaker said it would stop production at its St Petersburg plant which makes the Chevrolet Cruze, Opel Astra and Chevrolet Trailblazer models by the middle of 2015. The closure of the plant will mean the loss of 1,000 jobs.

It will wind down the Opel brand by December and stop assembling Chevrolet cars at GAZ, a Russian vehicle factory, reducing its presence on the Russian mass market to concentrate on premium car sales.

“This decision avoids significant investment into a market that has very challenging long-term prospects,” GM President Dan Ammann said.

GM said it would record around $600m in special charges related to the reorganisation of the Russian business, primarily in the first quarter of 2015.

Russia accounted for 1.9 per cent of GM’s global sales in 2014, down from 2.6 per cent in 2013.