New Russian Factory To Bolster GM Sales

Dmitry Medvedev, President of the Russian Federation and Carl-Peter Forster, GM Vice President and President of GM Europe at the opening of GM's flexible new assembly plant in Shushary near St. Petersburg. General Motors invested $300 million in this new plant, where 1,700 employees will eventually assemble up to 70,000 Opel Antaras, Chevrolet Captivas and - as of 2009 - Chevrolet Cruzes annually.

Forget for a moment that General Motors is losing billions of dollars each quarter. Forget also that the company is seeking federal intervention to help it survive another day. Finally, forget that 2008 is likely to see U.S. sales drop by as much as 20% when all is said and done.

For General Motors, the news isn’t all bleak especially in markets far beyond the U.S. In Russia, where GM has just about doubled sales for the year, the automaker is poised to advance its presence there thanks to a new factory in St. Petersburg that opened last week.

Chevrolet and Opel vehicles are in demand in Russia and GM has responded by opening up a new factory. With an industry leading 11% share of the Russian market, GM is seeking to boost its sales there while hanging on for its life in the U.S. The only thing that remains to be seen is whether its U.S. operations will bring down the entire house or whether federal intervention will slow or stop the process completely.

The Russian factory may also play a special role well beyond the auto industry. With tensions between Russia and the U.S. at the highest levels they’ve been since the former country split from the Soviet Union nearly two decades ago, the GM plant is showing that business cooperation can benefit both countries. Nobody is expecting a quick end to the difficulties between the countries, but if the building of a new GM factory helps, then GM’s investment could help contribute some peace along with 1700 new jobs.

(Source: General Motors)