Russia’s GAZ Looks to Replace GM Assembly Work
GAZ’s contract with GM to assemble Aveo cars at its 30,000-unit-capacity Nizhny Novgorod plant expires at the end of 2016, but production likely will end by the end of this year.
ST. PETERSBURG – Russian automaker GAZ Group is negotiating with unnamed global automakers about assembling cars after General Motors halts production in the country.
GAZ’s contract with GM to assemble Aveo cars at its 30,000-unit-capacity Nizhny Novgorod plant expires at the end of 2016, but production likely will cease by the end of this year.
The Russian automaker also builds Skoda models for parent Volkswagen, Mercedes-Benz Sprinter vans and frames for Mitsubishi Pajero cars assembled elsewhere in Russia. Sources within GAZ indicate Mercedes-Benz may partner with the Russian automaker after shelving plans to build its own plant in the country.
The negotiations are being held while GAZ is facing declining sales and pursuing expansion plans simultaneously.
Sales of GAZ light-commercial vehicles totaled about 9,000 units in first-quarter 2016, down 35% from year-ago. Pressured by devaluation of the ruble, the company was forced to raise prices for its Gazelle and Ural LCVs and cut its investment program 20%.
Vadim Sorokin, president of GAZ Group, says the company still plans to invest up to RR5 billion ($120 million) this year, but some projects may be delayed until 2016. No layoffs are planned.
GAZ plans to increase its share of the domestic LCV market up to 85% over the next few years. Key products are new-generation GAZelle Next and Ural Next trucks, as well as localization of YaMZ-530 engines.
The company also plans to increase LCV exports to Europe, where it is the sixth-largest manufacturer after Volkswagen, Ford, Mercedes-Benz, Renault and Fiat.
GAZ also has not ruled out the possibility of establishing vehicle production in Crimea.
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