General Motors’ German subsidiary, Opel, will decrease production at two factories in Germany over lost sales volume in Russia.
Opel originally planned to sell over 80,000 cars in Russia in 2015, but actual sales for the first half of the year have been roughly 9,000 units, down 73 percent year-over-year as a result of a weakened Russian economy affected by lower oil prices, a weaker currency and Western sanctions over the Ukraine crisis. Reacting to the economic downturn, GM is winding down the Chevrolet and Opel brands in Russia, leaving only Cadillac in the country. It has also idled its plant in St. Petersburg.
As a result of the lower sales volume in Russia, the carmaker will shorten hours at its plants in Ruesselsheim and in Eisenach, which produce the Adam Opel and Insignia, respectively. Opel says that the step will minimize inventories and related costs. The carmaker will also apply for subsidies for about 25 working days in Eisenach and 15 days in Ruesselsheim under Germany’s “Kurzarbeit” program. The automaker did not provide more specifics beyond that.
The Kurzarbeit program allows organizations to preserve jobs by reducing working hours when plant utilization in low. In turn, the government compensates workers for part of their lost wages.
In contrast to the Russian market, Opel sales in Europe were developing “moderately”, but the automaker remains confident in its ability to continue to grow its sales volume. For the first six months of 2015, sales rose 3 percent to 582,300 units.