BMW May Take Over Russian Plant Abandoned by GM

ST. PETERSBURG – BMW is in talks with the regional government here about taking over a plant abandoned by General Motors when it shut down its Russian operations.

According to St. Petersburg authorities and the Russian Ministry of Industry and Trade, the German automaker initially would produce components at the plant before launching vehicle production.

The plant would produce the same range of vehicles now built in Kaliningrad by contract assembler Avtovor – 3-Series, 5-Series and 7-Series sedans, as well as X1, X3, X5 and X6 CUVs. Output there rose 14.9% over prior-year, to 18,876 units, according to WardsAuto data, and production would continue at that volume even if a new plant is built, officials say.

After the GM factory shut down in the spring of 2015, the government of St. Petersburg promised to revive production by last fall. It held negotiations with several companies including Unison, GM’s partner in Belarus which produces Cadillac Escalade and Chevrolet Tahoe models, and Daimler, which decided to build a plant from scratch in the Moscow region.

BMW revenues took a hit last year when the Kaliningrad operation lost its exemption from tariffs on parts imported into Russia, regardless of the level of localization. Sales, however, rose 14.9% over depressed 2015 levels to 18,876, WardsAuto data shows.

Launching operations in St. Petersburg could favor BMW in terms of logistics, considering its proximity to the European Union and the city’s status as one of the world’s largest seaports.