GM Russia Hoping SUVs Shore Up St. Petersburg Plant

ST. PETERSBURG, Russia – General Motors increases output and adds new models at its loss-making GM Avto plant in St. Petersburg, looking to boost sales in Russia’s depressed automotive market.

The automaker this year is adding the Cadillac Escalade and Chevrolet Tahoe to a production schedule anchored by a third SUV, the Chevrolet Trailblazer, which enjoys relatively high demand in Russia, along with the Opel Astra and Chevrolet Cruze.

GM Avto will add production of the Opel Mokka CUV in 2016. Output will range between 15,000 and 30,000 units, depending on demand. Mokka sales were up 40% year-on-year through the first 10 months of 2014.

GM Russia production fell 9.8% through the first 10 months of October, compared with a 9.1% drop industrywide, according to WardsAuto data. Sales in the period tumbled 28.3% compared with an overall 12.7% decrease.

Three unscheduled shutdowns took place last year at the $303 million St. Petersburg plant and 500 of approximately 2,000 employees were laid off, leading to speculation in local media that GM would close the plant. Losses in 2013 reached RR5.3 billion ($120 million).

Some analysts say the automaker has struggled in Russia because of limited product range. Despite adding Escalade, Tahoe and Mokka output at the 7-year-old St. Petersburg plant, analysts with the Russian Ministry of Industry and Trade believe that will not be enough for GM to offset losses stemming from cutbacks in Astra and Cruze production forced by declining demand.

Current production capacity at St. Petersburg is estimated at 98,000 units a year. An agreement with the government calls for building 230,000 units this year.