GM Reconsiders Expansion Plan for Russia

General Motors Co. says Russia's worsening auto slump has prompted it to revisit plans to expand its assembly plant in St. Petersburg next year.

The $300 million (€226 million) factory opened with initial capacity to make 70,000 Opel Astra and Chevrolet Cruze small cars and Chevrolet Trailblazer small SUVs. The company had planned to expand the facility's annual capacity to 230,000 in 2015.

But earlier this week GM said it will reduce operations at St. Petersburg to only 16 days of production through October. Chevrolet and Opel sales in Russia plunged 23% and 17%, respectively, in July, according to the Moscow-based Assn. of European Businesses.

Analysts have forecast that Russia would soon overtake Germany as Europe's biggest national car market. But the current slump makes it unclear when that milestone will be reached.

Ford Motor Co. said in April it would eliminate 950 jobs at factories in St. Petersburg and Tatarstan operated by its 50:50 venture with OJSC Soller, citing declining sales. Last month it announced a $481 million (€363 million) impairment charge to write off its investment in the partnership.

Ford-Sollers makes the Edge crossover, Explorer SUV, Focus small sedan, Galaxy minivan, Kuga crossover, Mondeo midsize sedan, S-MAX MPV, Transit commercial van and Tourneo Custom large van.