Boston, MA 09/16/2014 (wallstreetpr) – One of the biggest U.S. automakers, General Motors Company (NYSE:GM)’s Opel has slashed its production in Russia amidst a drop in car market coupled with a weak currency on top of the political turmoil. As a result, the European Division would also reduce the jobs in Russia.
Production Cut
The General Motors Company (NYSE:GM)’s manufacturing facility in St. Petersburg was cutting down its operations to just one shift a day compared to two, Bloomberg said. As if this was not enough, it was also providing its salaried employees voluntary buyout packages.
This is the second move within two months from General Motors Company (NYSE:GM) at the same manufacturing facility, which witnessed suspension of manufacturing of cars between August 22 and September 12. The company’s move came on the back of a new light-vehicle registrations witnessing a 12% fall in Russia during the eight-month period. The economic slowdown was attributed to the dispute of Russia with Ukraine, and the currency too was weakening making the conditions still more difficult. The company disclosed that Opel Vice President for Purchasing, Susanna Webber, would take over as General Motors Company (NYSE:GM) Russia President to oversee the production and job cuts.
Third Largest Market
In the year 2013, Russia was ranked as third largest market for Opel after Britain and Germany. In contrast, the market is facing serious disturbances in the current year. However, Opel Chief Executive Officer, Karl-Thomas Neumann, expressed his confidence on the long-term potential of Russia. He said that there was an immediate pressure on its pricing and sales volume even as the local currency was weakening.
General Motors Company (NYSE:GM)’ Opel was one among the many automakers to invest in Russia with the expectations that the country would become the largest car market for its European division surpassing Germany. However, after the trade sanctions were imposed by the U.S. and Europe, Russia has been on the verge of recession. Significantly, Ford Motor Company (NYSE:F) has already written off its $329 million investment in its joint venture with OAO Sollers in Russia.
