General Motors has temporarily suspended sales of new vehicles to its dealerships in Russia, adjusted prices, and scaled production down to one shift at its plant in St. Petersburg. The steps are a result of GM’s desire to manage its business risk spurred by the volatility of the country’s currency, the Russian rouble.
Over the last several weeks, the rouble saw a steep drop in value due to slumping oil prices and sanctions imposed by the U.S. and Europe over Russia’s involvement in the Ukraine. Just last week, the currency fell as much as 20 percent in value against the U.S. dollar; since the start of the year, it has lost about half of its value.
According to Forbes, the automaker will deliver sold Chevrolet, Opel, and Cadillac vehicles at the agreed-price.
GM isn’t the only automaker to take action in the face of an unstable rouble. Last week, Volkswagen Auto Group’s Audi has announced that it has postponed vehicle deliveries to dealers in Russia, while BMW is routing inventory destined for Russian showrooms to other markets in Europe.
Earlier this decade, analysts expected Russia to overtake Germany as Europe’s biggest auto market. This, however, has yet to happen, and the country’s new car registrations are down 11.6 percent so far in 2014. For GM, the Russian market has consistently ranked in the top 10 by volume, and a drop in sales in the country will likely have negative effects on its sales volume, revenue, and profitability.