BIRMINGHAM, England -- Most vehicle assembly plants in Russia are not cost competitive because they are not producing enough vehicles, said Bo Andersson, who is CEO of Russia’s largest carmaker, AvtoVAZ.
Among the plants Andersson says are not producing enough to make money are Ford and its local partner Sollers' three factories in the country as well as General Motors’ two factories.
“I would say only 5 [out of the country’s 15 car plants] are sustainable, and they are the ones with production volumes over 175,000,” he told the Automotive News Europe Congress here on Wednesday. Vehicle assembly plants in Europe generally have a capacity to build 200,000 to 400,000 vehicles a year, he said.
GM said in March that it will stop car output at its St. Petersburg factory and end a production agreement with Russia’s GAZ Group, which makes the Chevrolet Aveo in Nizhny Novgorod. GM also is ending sales of mainstream Chevrolet cars and all Opel models in Russia, where sanctions over the conflict with Ukraine have weakened the economy, causing car sales to slump.
Through May vehicle sales in Russia were down 38 percent to 641,933 while GM’s volume was down 70 percent to 25,776 during the same period, according to figures from the Moscow-based Association of European Businesses in Russia.
When Andersson, GM's former global purchasing boss, was asked whether others will follow GM out of Russia he said: “What the rest of the people will do I don’t know. I have enough of my own problems.”