General Motors to stop building cars in Russia

MANILA: General Motors is pulling out of Russia after agreeing to sell AvtoVAZ their stake in their car assembly venture. General Motors and AvtoVAZ, Russia’s biggest automaker, had both entered a 50-percent joint venture back in 2001 to build the Chevrolet Niva SUV in Togliatti. As a result, the subsidiary will now become fully-owned by the AvtoVAZ Group, ending General Motor’s presence as a manufacturer in Russia.

General Motors has been slowly trimming its operations for the past few years. The automaker pulled out of Europe when they sold their Opel and Vauxhall subsidiaries. Their most recent exit is from Indonesia, being only one of the Asian markets they have also withdrawn from. A number of their assembly lines in North America have also been shut down.

The two automakers officially signed the new agreement on Monday. While AvtoVAZ did not disclose the financial details of the deal, they did assure that the factory will continue to produce and sell the Niva off-roaders under the Chevrolet brand for a certain period of time. According to the Russian automaker, they plan to eventually transition the model under the Russian Lada brand.

Lada currently still sells the older Niva, which is marketed as the Lada 4x4 in Russia. This means AvtoVAZ will have two Nivas in its lineup. The automaker added that they will also rename the GM-AvtoVAZ company to reflect the new ownership status. However, AvtoVAZ has stated that there will be no changes for the employees of both companies. They added that withstanding contracts with suppliers and Niva dealerships shall remain during the transition period.

General Motors has also assured that they are not completely leaving the Russian market for now. The assembly of Chevrolet vehicles in the country will cease, however, they will continue to offer their products. Chevrolet currently sells three models in Russia: the Tahoe, Traverse, and Camaro — all three are built in North America.

Auto sales in Russia have been declining since the imposition of Western sanctions back in 2014, coupled with the weakening of the local currency and falling oil prices. Russia’s automobile market struggled the most in 2019, with sales gradually falling by 6.4% year-on-year.

Sales of the Niva were at 1,950 this November, which is down from November 2018 sales which was at 2,365 according to the AEB Industry Association.

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