General Motors Courts Russian Market At Moscow Auto Show and With $1B Investment

  on August 29 2012 11:26 AM

General Motors Company (NYSE: GM) confirmed a $1 billion investment into developing its Russian manufacturing by the end of 2018, Wednesday, as the company courted the Muscovite market with three European debuts.

The General is embarking on an outright Siberian assault with plans to debut three new European models at the Moscow International Motor Show on Wednesday in addition to announcing the massive manufacturing investment. GM is holding the European debuts of three Chevrolet models, the Colorado pickup truck, Trailblazer SUV and Cobalt compact car, a move which exemplifies the company's increased presence in the Russian market.

"As the fourth-largest market for Chevrolet, Russia has become a priority for General Motors. We are responding with products that will satisfy the needs of our customers nationwide," President and Managing Director of GM Russia Jim Bovenzi said on Aug. 21. The three vehicles are ideal for the Russian market, with both the Colorado and Trailblazer filling a niche for durable work vehicles, and the Cobalt, a car that has been discontinued in the North American market, filling a niche for relatively low-price compact cars. The 2010 Cobalt retailed in the U.S. for around $15,000 MSRP.

Bovenzi confirmed the $1 billion investment, previously announced in June, to The Voice of Russia radio on Wednesday.

GM broke ground on its St. Petersburg factory in June with plans to double annual Russian production by 2015. The $1 billion investment will be used for the St. Petersburg factory and expanding the company's joint venture with AvtoVAZ in Togliatti to boost annual Russian production to 350,000 vehicles. The St. Petersburg expansion is scheduled to be completed by 2015, with the whole Russian expansion completed by the end of 2018.

"General Motors is embarking on a new era in Russia, one of the world's fastest-growing vehicle markets, as part of our strategy to build where we sell," GM CEO Dan Akerson said in June.

The expansion of the St. Petersburg factory may prove a lifeline to GM's struggling Opel brand as well. The Astra sedan will be produced there once the expansion is completed. Opel's European sales have been flagging in recent years and the company has been in contentious negotiations with labor unions to close factories in Western Europe.

Chevrolet is currently the best-selling brand in the Russian automotive market. Russian car sales grew 40 percent last year to 2.5 million vehicles between all manufacturers, according to Reuters. In 2011, GM sold 173,484 Chevrolet vehicles in Russia, a 49 percent increase over 2010. The company has already sold 115,755 Chevrolets in Russia in the first seven months of 2012, an increase of 19 percent over last year.

General Motors Company (NYSE: GM) shares rose 17 cents to $21.11 Wednesday morning.

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