GM opens first Russian factory
General Motors Corp. launched its first Russian assembly plant on Friday, with expectations of improving the global performance by increasing its presence in emerging markets. The new plant located outside St Petersburg has investment of USD 300 Billions & capacity to produce approx 70,000 cars per annum. On the other hand the company has reported loss of USD 2.5 Bn in 3rd qr & is facing severe liquidity crunch.
Ford and Toyota have both opened plants in the St. Petersburg region and Hyundai, Nissan, and Suzuki are launching production in coming years. All manufacturers, including Peugeot Citroen and Mitsubishi Motors, are opening factories in other regions near Moscow.
The Russia's car market was likely to emerge as Europe's largest before the global meltdown. However, now loans for cars are difficult to obtain & the industry sales have almost reduced to 50%.
Russia is still on growth trajectory whereas North America & Europe are down by almost 25% according to Metropol investment bank in Moscow.
The demand for low priced cars has however shot up. The 1st qr of 2009 is likely to be difficult for the auto industry in Russia. But as car loans availability eases the market is expected to grow & Russia is likely to be the Europe's largest car market by next year.
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