Western automakers are giving up on Russia.
Half a decade ago, Russia was seen as a vast growth opportunity. The US market had been weakened by the financial crisis, and Europe looked limited.
All the major car makers wanted to get in on the action.
But in early 2015, the Russia market is falling apart.
Last year, Ford took a big hit on its Russian sales goals. The impact on the company’s stock was swift and merciless.
Now General Motors has announced that its Opel division will exit the plunging Russian autos market and abandon production its plant in St. Petersburg by the end of the year, according to Handelsblatt, citing Opel Chief Executive Karl-Thomas Neumann.
Car sales in Russia are falling fast as the country’s fragile economy and weakening currency are hit by Western sanctions over the conflict in Ukraine and buyers delay making large purchases.
GM’s Opel and Chevrolet brands will quit the market and cooperation with Russian carmakers will be broadly terminated, the newspaper said, citing Neumann.
“We have reached the view that the perspective for the Russian market is not good over the short term and also not over the medium term to long term,” the CEO was quoted by Handelsblatt as saying.
The turnaround in sentiment toward Russia as a growth auto market has been stunning. Once a appealing new frontier, the country has become a liability. Long-term, this could hurt major automakers’ bottom lines, as they tap out sales in the US, Europe, Latin America, and China. But short-term, the Russian cash suck has to end.
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