Weak ruble hits profits, car sales
in Automotive News Europe, by Bernie Woodall, 29-01-2015
DETROIT (Reuters) — General Motors Co will suspend production at its St. Petersburg auto assembly plant in Russia from mid-March until mid-May and is raising prices for its products because of the weak and volatile Russian ruble.
A GM Europe spokesman today confirmed a report by the Russian daily newspaper Kommersant of the plant shutdown.
GM has raised prices for its vehicles sold in Russia because of the devalued currency, the spokesman said, but he could not confirm Kommersant’s report that prices for GM products have risen an average of 20 percent in the last two months.
Last year, GM’s Russian sales fell 26 percent to about 258,000 vehicles, according to data from the Association of European Business (AEB).
Industrywide, the AEB said that auto sales in Russia fell 10 percent to 2.49 million vehicles last year and that it expected 2015 sales to fall to 1.89 million, a forecast that several automakers said was too optimistic.
GM builds builds the Opel Astra and Chevrolet Cruze in the St. Petersburg plant, according to the Automotive News Europe Guild to Assembly Plants in Europe. The St. Petersburg plant is the only one GM fully owns in Russia. It also operates operates a joint-venture plant in Russia with AvtoVAZ.
Ford, VW Russia woes
Ford Motor today cited Russia’s weak ruble and struggling economy as major reasons the company lowered expectations for its European business in 2015.
Ford had previously estimated losses from Europe at about $250 million in 2015. Ford today said the loss would narrow from $1 billion in 2014 but would be wider than previously thought.
“We expect to see a big headwind from Russia in 2015,” Chief Financial Officer Bob Shanks said of a market that was once projected to become the largest in Europe, with more than 4 million in annual vehicle sales.
“We’re looking now at industry volume this year that’s probably sub-2 million units. You’ve got very high interest rates. You’ve got the collapse of the ruble,” he said
Volkswagen’s labor chief Bernd Osterloh said today that VW lost hundreds of millions of euros in Russia because of the decline of the ruble.Bloomberg and Automotive News Europe contributed to this report