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Automakers Scramble As Russia’s Economy Melts down

GM, Audi, JLR temporarily abandon market, Nissan limits sales.

by on Dec.19, 2014

GM is one of several makers to cut off shipments to dealers like Moscow's Major, while others are sharply rising prices as the ruble collapses.

What seemed like a dream market just a few years ago has now turned into a nightmare, the Russian economic meltdown sending automakers from around the world into a scramble.

With economic sanctions already taking a serious toll, this past week’s collapse of the ruble has led General Motors, Audi and Jaguar Land Rover to temporarily halt sales in the heart of the former Soviet Union. Nissan, meanwhile, has decided to limit sales of some models and raise prices on others.

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“When the ruble sinks it’s a bloodbath for everybody,” said Carlos Ghosn, CEO of the Renault-Nissan Alliance., which is the biggest maker in Russia along with its local partner Avtovaz. “It’s red ink, people are losing money, all car manufacturers are losing money.”


Russia Ready to Retaliate – and Automakers Could Take a Big Hit

One unexpected winner could emerge.

by on Aug.19, 2014

A worker on the AvtoVAZ assembly line in Togliatti, Russia, a plant now run by Renault-Nissan.

Slammed by sanction for its role in the Ukranian revolt, Russia is warning it may tighten retaliatory sanctions against the West by banning automotive imports.

The crisis in the Ukraine has made stock traders around the world nervous, leading to some major swings in key indexes and raising fears about the overall strength of the European economy, which is just beginning to recover from a steep recession.

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But retaliating against Western automakers could have unforeseen consequences for Russia itself as it struggles to build momentum for its own economy. Car sales in the heart of the former Soviet Union also slumped badly along with the rest of Europe.


Russian Auto Market Holds Too Much Promise to Ignore

by on Apr.17, 2014

The Datsun on-DO is the brand's first offering in Russia. It is a four-door, five-seat family sedan.

Despite the air of perpetual crisis that hangs over the country, Russia is too simply too large and too important a market for carmakers to ignore, experts said during a conference on “Understanding Russia’s Current and Future Automotive Industry” at the University of Michigan.

“The Russian market is going to be larger than Germany,” said John Branch, a professor at the University of Michigan Ross School of Business told a conference sponsored by U-M’s Transportation Research Institute this week.

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Automakers, particularly those with global ambitions, simply can’t afford to ignore the Russian market despite its volatile nature, added Branch, who noted the structure of the Russian auto industry is in flux as the demand for imports increases despite barriers imposed by the Russian government. (more…)

Russian Auto Industry Could Be Hurt by Ukraine Crisis

Ford cuts jobs, production..

by on Apr.04, 2014

Workers on the line at the Ford plant in St. Petersburg, where 700 jobs are being cut.

The temperature might finally be warming up after the frigid Russian winter, but the country’s auto industry is suddenly feeling a big chill.

Russia has been the target of increasing sanctions in the wake of its disputed annexation of Ukraine’s Crimean Peninsula and the threat that Russian President Vladimir Putin might send troops into the neighboring country in an expanded land grab.  That has led to a flood of capital leaving the country and signs that the crisis could strike hard the Russian economy.

The crisis is causing “uncertainty in the marketplace,” warns consulting firm Accenture.

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Ford sent a chilling signal this week when it announced plans to trim 950 jobs at its two Russian plants, including 700 full-timers at its primary facility in St. Petersburg – almost one in five of its employees in the country. The maker is blaming an already weak economy, as well as the weak Russian ruble, but observers warn that this could be just the first sign of a serious setback for the country’s auto industry – especially if the Ukrainian crisis drags on, or rose, escalates.


General Motors and Ford want American suppliers to follow them into Russia.

GM planning $1 billion investment in old Soviet heartland.

by on Jan.25, 2012

Cars move along Ford's assembly line in St. Petersburg.

General Motors is planning to invest more than $1 billion in Russia over the next five years, said James Bovenzi, managing director of GM Russia and CIS, and it expects production, including production by its joint venture partners, to double from 232,000 units in 2010 to more than 520,000 units in 2015.

But the maker doesn’t want to do it alone.  GM wants its traditional supply network to follow along.  And so do Ford, which sees significant growth potential of its own in Russia.

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“The reason we are there is we see opportunity,” Bovenzi said during a dinner meeting arranged by the U.S.-Russia Business Council to encourage American automotive suppliers to consider investments in Russia.

“There is a lot of pent-up demand in Russia” he noted. “The average vehicle is more than 10 years old.  The middle class is growing and nine of the 10 best-selling cars in Russia are foreign brands,” noted Bovenzi, adding GM’s Chevrolet brand was a top seller.