Thursday, October 24, 2013

GM Europe to Oversee Company's Russian Operations

General Motors Co. on Friday said it is folding its Russian automotive operations into GM Europe partly to extend the reach of Adam Opel AG, its struggling car business in Western Europe.
The move underscores GM's efforts to return the money-losing Opel unit to profitability and the potential it sees in the Russian auto market. GM's Russian joint venture, called GM-AvtoVAZ, had been under the company's International Operations unit, which includes Asia and the Middle East.

Russia has become a focus for auto makers and parts suppliers as a strengthening economy has lifted consumer sales in recent years. GM's sales in the country last year rose around 20%, to around 290,000 cars, and a market share of around 10%. This year, the Russian market has cooled, down 7% year to date compared with a year-earlier, according to the Association of European Businesses in Russia, a leading trade group.
Previously, the company's operations in Russia reported to General Motors International Operations, based in Shanghai. All GM operations in Russia are due to be integrated into GM Europe effective Jan. 1. In addition to Opel, GM brands in Russia include Chevrolet and Cadillac.
Foreign auto makers are looking increasingly at Russia, where levels of car ownership are relatively low compared with the saturated Western European market. The alliance between France's Renault SA and Japan's Nissan Motor Co. is due to take full control next year of Russia's biggest auto maker, OAO AvtoVAZ. It has just nominated former GM executive Bo Andersson to become AvtoVAZ's first foreign president.

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