Russian Official: GM Hit Hardest By Falling Ruble

ST. PETERSBURG – No other global automakers appear to be following General Motors out of Russia, Industry and Trade Minister Denis Manturov says.

The automaker is ceasing manufacturing and is halting sales of both its volume models and Opel brand, leaving only niche products – Cadillac and the Chevrolet Corvette, Camaro and Tahoe.

Light-vehicle sales plunged 42.5% in March from like-2014 and first-quarter deliveries slumped 36.3%, according to WardsAuto data. GM fared far worse, as March and first-quarter deliveries plunged 73.0% and 71.7%, respectively.

Manturov says GM’s relatively low 25% level of local sourcing, manufacturing activity and R&D hurt the automaker when the value of the ruble began sinking.

“The 25% localization, along with the devaluation of the Russian currency…made the company uncompetitive with South Korean auto producers, whose already have raised their level of localization to more than 50%,” he says.

GM dealers in Russia are criticizing the company’s decision, with many contending it was due to political reasons and in particular because of U.S. government pressure. The U.S., European Union and other countries imposed economic sanctions on Russia following its March 2014 annexation of Crimea and have extended the sanctions over its support of separatists in eastern Ukraine.  

Some say they plan to file class-action lawsuits against GM.

Ford Sollers, a joint venture between  Ford and Russian automaker Sollers, says it will provide service to owners of GM vehicles and conduct trade-in programs. The JV also hopes to place its cars in some Russian GM dealerships, although some retailers have stopped selling Ford cars in retaliation for the U.S.-led economic sanctions.

Ford Sollers announced last month it was scaling back but not suspending production of Focus and Mondeo models at its plant in Vsevolozhsk, Russia. Operations there were suspended for more than three months last year.

Ford sales in March and in the first quarter fell at the same rate as GM’s – 72.9% and 70.9%, respectively – on roughly one-third the volume of its U.S. rival.  

Volkswagen and Toyota say they are operating at normal levels, while Nissan has resumed production at its St. Petersburg plant after a 2-week shutdown last month.