GM Leaves Russia, Bought Out by AvtoVAZ

Russia’s largest automotive manufacturer, AvtoVAZ, announced Monday that it plans to buy General Motors out of its regional joint venture. The duo previously assembled Chevrolet-branded automobiles for the local market; however, GM lost interest after the market took a turn for the worse.

While sanctions from Western nations and falling oil prices upended Russia’s economy a few years ago, it was already headed for hard times. Wages have stagnated and average citizens no longer possess the same level of buying power they held a decade earlier. The Russian Economic Development Ministry predicts just a 1-2 percent growth rate up to 2030 and leadership doesn’t seem terribly interested in improving the situation for the citizenry, deciding instead to raise taxes on just about everything. GM was probably right to get out. 

According to Reuters, AvtoVAZ signed an agreement to buy General Motors’ 50 percent stake in the venture, which saw the two companies build the Chevrolet Niva from a factory in Togliatti. While the Russian firm did not disclose financial details, the purchase effectively leaves GM with nothing to do and ends its assembly commitments in the region.

The Togliatti factory will continue rolling out models under the Chevrolet brand for “a certain period of time” before switching to Russia’s Lada brand, according to the agreement.

The facility has a capacity of roughly 100,000 cars a year but it’s unclear as to how much of that cap will be utilized. The Association of European Businesses reported on Thursday that Russia’s new vehicle sales are down 6.4 year-on-year for 2019. Lada has also been struggling. In November, the company announced the sharpest decline it has endured in three years.

first posted on TTAC

Comments