It will also offer voluntary severance packages to about a quarter of the plant’s 2,000 staff and accelerate a move to use more local suppliers — a shift that will help it to cope with a weakening Russian rouble
Reuters
US carmaker General Motors is cutting production and shedding around 500 jobs at its Opel division in Russia, hit by a plunge in local demand due to a slowing economy and Western sanctions.
Opel said yesterday it would scale back production at its plant in St Petersburg to a total of 16 days during the three-month period from August to October.
It will also offer voluntary severance packages to about a quarter of the plant’s 2,000 staff and accelerate a move to use more local suppliers — a shift that will help it to cope with a weakening Russian rouble.
Auto sales have slumped in Russia this year as slowing economic growth is causing people to put off purchases.
Western sanctions over the crisis in Ukraine and the devaluing rouble are causing further strains to carmakers. The rouble is this year’s biggest-declining major emerging currency, having lost more than 15% in value.
Russian passenger car sales tumbled 23% in July alone, extending their year-to-date drop to almost 10%.
General Motors (GM) is one of the foreign carmakers most exposed to Russia. Its share of the local market shrank to 7.8% in January-August from 9% a year ago. “Russia was our third-biggest market last year after the UK and Germany,” Opel chief executive Karl-Thomas Neumann said. “At the moment, this market is locked into severe turbulences.”
Russia’s top automaker Avtovaz said last month it would cut production of its Lada cars by 25,000 vehicles between September and November, though workers would continue to get their full salary.
Volkswagen, Europe’s largest automotive group, said earlier this month it would suspend production at its Kaluga factory in Russia for 10 days from September 8, while keeping to longer-term expansion plans.
GM said it would move to one-shift operations at St Petersburg where it builds the Opel Astra and Chevrolet Cruze compact models.
Opel also said it aimed to purchase 60% of all parts locally to alleviate cost pressures in St Petersburg. “Demand has been in free fall recently, none of the carmakers producing in Russia will be able to escape output cuts,” said Tatiana Hristova, analyst at market research firm IHS Automotive.
Production of passenger cars and commercial vehicles weighing up to six metric tons may slump 14% this year to 2.4mn autos, declining a further 6.5% in 2015 to 2.24mn before rebounding in 2016, Hristova forecast. Restructuring at Opel will also involve changes in senior personnel.
Susanna Webber, head of purchasing and logistics, will take the helm of Opel’s Russian operations with immediate effect, to be assisted by new vice president Andy Dunstan, who previously was the carmaker’s managing director in the country.