Did GM’s Decision To Pull Chevy Out Of Russia Damage The Brand?
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Did General Motors damage the reputation of the Chevrolet brand in Russia when it withdrew it from the market in March of last year? Russia’s Trade and Industry Minister, Denis Manturov, believes so.
While commenting on Chevy’s rumored return to Russia, Manturov said that Chevrolet would have substantial ground to make up in the country after last year’s pullback, which significantly damaged the brand’s reputation.
But the RAAD, or the Russian Association of Auto Dealers, is less pessimistic, saying that criticism voiced by Manturov and others is exaggerated and unfounded. It also pointed to the brand’s competitive pricing that made it popular among Russian buyers.
In September, reports from the Russia and CIS area stated that GM is planning to reintroduce Chevrolet back to Russia by having the vehicles produced by a third party in Kazakhstan. RAAD anticipants roughly 30,000 Chevrolet sales in its first year of returning to the country with such core models as the Cruze, Captiva and Aveo (Sonic). Hyundai and Kia are expected to be primary rivals.
General Motors announced plans to withdraw its Chevrolet and Opel brands from Russia in March of 2015. The move came as a surprise to many, since Russia was projected to be among the top three global markets poised for significant sales volume growth by the middle of the next decade. Even so, GM made the decision as new vehicle sales started to free fall in the face of an economic downturn caused by sanctions from the West.
In September, sales of new passenger cars and LCVs in Russia decreased by nearly 11 percent year-over-year, according to data released by the Moscow based AEB. A total of 125,568 light vehicles were sold during the month. In the first nine months of the year, some 1,020,932 units were sold, representing a 14.4 percent decrease over the same period in 2015.
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Well doing business in Russia is not like doing business anywhere else. It is very disorganized and corrupt.
Right now with Putin the whole deal is crazy as to where things will be in the next 10 years,
Doing business in Russia is a major risk and you have to calculate as a company is the risk of gain worth the risk of loss if this all goes south.
With relations at their worst in years and not getting any better soon it is a large risk.
Even if Russia booms American companies could be tossed out at any moments notice.
I suspect GM is willing to sit this out for a little bit to see just where all this goes. I think they expect things to only get worse after the election. Out relations have tanked in the last 10 years and are getting worse by the day. Putin is working to bring back the bad old days and he may just do that.
Gorbachev who has tried to remain silent has spoken up that dialog needs to be restored or this will get ugly fast. Gorbachev is very much a man of both their country and ours as he has lived here often after he left office. His warnings should be taken seriously.
We made a grave mistake with the reset about 6 years ago. We reset Putin did not.
My thoughts are till things settle just import cars that are needed and not invest much there would be a safe move. GM could build all new plants next year and then they are taken by the government and end up making Lada vehicles for them.
Funny but one of the real issues in these problems is in a photo just over my post. What is troubling I really don’t believe either one running for office will make much progress with Russia.
trump will be russia’s lap dog. that much is clear.
all putin has to do is pay trump a few cheap compliments and trump will gladly bend over.
At this point we don’t know.
I think his approach is not to bad mouth the guy before you meet him let along get elected.
He still could F it up but at this point we don’t know who will be his secretary of state will be. If it were John Bolton as it could be or Rudi there will be no lap dog. But then Trump could spout off with something stupid to day and make a real mess too.
As for Hilary. Well her past shows she failed in the reset of relations. Today we are paying the price for that mistake. How much was Obama and how much would she do different is the wild card but I suspect little will change. But she has two views according to her one public and one private.
In the end neither are suited of office and we have no other options. What a mess.
Anyone smart enough for office is smart enough not to run. Our country is in a mess and I do not see either side doing much to right the ship at this point.
The independents are both as qualified as Pee Wee Herman and as smart.
I say Joe Walsh for president. LOL!
Scott — in referring to the alleged disorganization and corruption of the business environment in Russia, you are referring to the way things were roughly 15-20 years ago. Though things are not perfect today, there is significantly less of that now to the point where you can trust the system in a significant majority of circumstances, much like right here in the US of A.
Furthermore, no company has ever been “tossed out” of Russia… American or otherwise.
And to say that “Putin is working to bring back the bad old days” is the equivalent of saying that the U.S. will soon “take over” Cuba, Mexico, and Canada. If you read and/or listen to interviews of him and his party outside of what is served in the U.S., you will see that the #1 goal is economic growth for the country. This is further highlighted by the national plan and budget for the next decade. None of this describes the “good old days”.
Now,how either of the two leading American presidential candidates will handle the relationship with Russia is a big question mark at this point. That said, only Mrs. Clinton has so far made negative remarks in the public about a leader with whom she may have to work with if elected U.S. President.
I think in the long run it would be crucial to GM Europe and especially Opel to return to Russia which ist the last great growing market in Europe. One day the sanctions will be discontinued. Then GM must be ready to return.
Opel had a great Image in Russia, Chevy performed well there. It would be a mistake to ignore Russia forever.
-Opel, sure, but the anti Americanism preached by Putin will make Chevrolet a hard sell. This gets worse with all the war talk regarding Syria and the Kremlin bragging about limited nuke exchange.
GM Europe should focus on European brands with the exception of possibly Cadillac (even though few will ever bee sold in any region in Europe sans the UK and Ireland).
The “anti-Americanism preached by Putin” only exists in the U.S. media, my friend. It doesn’t actually exist in Russia itself. There was a mutual pact between the U.S. and Russia over Syria, which the U.S. started to back out of for reasons unknown, which has landed the two countries in the current situation. But that’s a different topic altogether.
The potential for vehicle sales in Russia is quite large. Currently, Kia, Hyundai and to some extent, Skoda, are killing it there. Hence, there is strong potential for both Chevy and Opel there. There is also a significant demand for luxury cars, so the potential for Cadillac is vast, especially with the conservative styling of the German three. You don’t see much of this sales potential in official sales reports… but when you look at the amount of registrations, it far outstrips new vehicle sales — which lends credence to the theory that most vehicles registered in the country are imported/trucked/driven from parts of Eurasia.
I am curious, since American media is all I seem to get, where is some credible information that suggests Putin is NOT anti-American – or is not anti-western? Even Reuter, BBC, TheGuardian and AlJazeera seem to agree that Putin is distrusting of the U.S. Do you have some sources or links I could read up on?
I’m open to new information that would expand my worldview. Thanks.
I read a lot of Russian media. This isn’t the traditional anti American rhetoric that we are used to but instead a real geopolitical clash.
40 million Russians were just taking part in nuclear war drills and the entire nation its on notice to locate nearby bomb shelters. This is going to effect American car sales.
Russian media rails against US advisers in Ukraine, EU economic links for Georgia promoted by Washington. Lastly, the Russian news speaks of WW3 on a daily basis due to Syria. Even McDonald’s Russia has seen sales dip and now trues to promote itself as “Russian”… good luck with that.
Opel, with Germany perceived as neutral or even friendly, will do far better than Chevrolet
Steve — you say you read a lot of Russian media. What media might that be? I have been following the developments discussed here in both English and Russia for the last several years. The disparity in reporting between the U.S. and Russia are vast.
Now to address your comment:
1. The 40 million “Russians were just taking part in nuclear war drills and the entire nation its on notice to locate nearby bomb shelters.
Where is this number coming from? What reliable, non-American source can you present to verify this? There short answer is that you can’t, simply because it’s not true.
Just think about it: the population of Russia is 144 million. If 40 million participated in whatever you are referring to, that’s basically one third of the total population. I just spent several weeks in Russia. There were no such activities. Maybe if you lowered that 40 million figure down to about 3-5 million, which would align with the amount of active military personnel, you’d be significantly closer to reality.
2. “the entire nation its on notice to locate nearby bomb shelters”.
Again, where is this coming from? The entire nation is actually continuing to live their lives and go about their daily business like normal. Looks like more fear-mongering propaganda from questionable sources.
3. “Russian media rails against US advisers in Ukraine, EU economic links for Georgia”
Actually, the Russian media doesn’t “rally” against anyone, which is something that is basically unknown around the world. Who/what is doing the rallying are various political groups on open-air talk shows, such as “вечер с владимиром соловьевым”, where any of the invited guests can voice their opinions on live TV, whatever that opinion may be.
So again, there seems to be a great amount of disparity between reality and what is being reported by fear-mongering sources of media. There is no major backlash against America or Americans in the country. If GM were to re-introduce Chevy there tomorrow, sales would be quite healthy. The same goes for Ford.
The Russian question is one that needs to be answered fast when the time is right. The problem now is the time is wrong but they need to prepare to be ready fast when the timing is right or if it is ever right.
Risk and reward much be balanced.
In China now while the risk was being forced to partner with a Chinese MFG the reward is they are now dependent on the west for market and development. But if that ever shifts or should I say when it shifts the dynamic will have changed and then changes will be needed. Time is not to prepare for that dynamic before you face it not when you face it.
This is much like high stakes poker.
40 million Russians just participated in civil defence nuke bomb drills as a result of poor US/Russian relations and the flashpoint of Syria.
Sure, most of this was to ensure Putin stay politically popular. Still, American products are currently not popular in Russia and the situation will stay the same for a while.
Mary Barra was smart to leave Russia. Visionary one could say. Maybe GM should sell Boujan brand products? Or “German” Opel? Chevy is simply too American for cold war 2.0.
At this point Russian US relations are too unstable for any investment under any name.
It is clear at some point they will put sanctions back on trade with Russia. The major issue is in the past their leaders would negotiate. He will not negotiate.
Putin has one goal and that is to restore the Soviet Republic. He is cold and calculating and will do what ever it takes to make his goals.
The one wild card is the organized crime in Russia as they control a lot of what is going on. If Putin works with them they will stay out of the way. If he cuts them off it will be a bloody war and I think he knows it.
Russia is a country that is wanting to be a first world country but is tipping into the third world of unstable government and poor economy.
What goes into Russia as investment may never come back.
With China we have mutually assured economic destruction terms. With Russia Putin is only in it for himself and the old ways. The weakness of the economy has only driven the people more to his way of thinking if he promises to bring them their needs that many are not getting today.
As for GM I would just import what you can from the other Euro factories and keep a presents but I would do little to invest in building plants or product in country. If you do only invest what you are willing to risk losing or not using if sanctions are placed.
Putin was never this bold before as he knew we would not let him get away with anything. today he views our leaders as weak. He took advantage of Obama and Clinton on the reset and he mocks Kerry daily with his actions.
The sad part I see no improvement after the election.
His ties to the Middle East are dangerous and his working with Iran now that they have money is just down right scary.
If he continues his improved relations with China it really could flip the balance of power.
“Still, American products are currently not popular in Russia and the situation will stay the same for a while” and “Chevy is simply too American for cold war 2.0”.
I’d argue argue the opposite. The overwhelming majority of Russians are actually very fond of American products and services. They buy iPhones by the boatload… they eat at McDonalds and Burger King like nobody else in Europe, and they buy Coke products as if there will be a shortage of the product tomorrow. This also applies to other industries and products, like cigarettes, clothes, and even cars.
The biggest problem in seeing actual Russian demand for some of these results, however, is considerable lack of supply and availability. Take, for instance, the iPhone: go to the country, and you will see one in three people using an iPhone. However, there is not a single official Apple store in the country. How are these phones getting to Russia, then? A “friend” would buy 5 unlocked units in the U.S. and then bring them back to Russia, with money well paid for in advance for those reserving theirs. This work-around is very cumbersome and significantly stifles sales opportunities.
The image of Chevrolet in Russia remains legendary… it’s all driven by such nameplates as the Blazer and Tahoe, which have long been regarded as the perfect all-season vehicles. To a lesser extent, the same holds true for Ford. The only problem is that currently, people can’t really buy the new Trailblazer in Russia, and the Tahoe is too expensive. If the Cruze, Malibu, Aveo, Captiva, Trax/Tracker were available, they would sell quite well, especially against the likes of Ford, Hyundai, Kia, and Skoda… and to a certain extent, VW.
Let us remember that the Chevrolet brand had an easy entry into Russia on the backs of Daewoo who had done all the heavy lifting over more than a decade. Any re-entry will not be as easy and will have to overcome any stigma of leaving.
There is merit in getting back into the market on a very small scale with lower cost cars so as to be poised to take advantage of any future recovery. This strategy would gradually erase any stigma of leaving.
A GM executive once said that Russia has great risks but the biggest risk is not being there when its economy takes off.
It’s probably done the same amount of damage as what stopping local Commodore production will do to Australia. Once the real Commodore is gone, GM might as well pull out altogether as they won’t sell anything. Their Korean piles of crap already don’t sell too well, and they stuffed up having the Cruze assembled there (if it’d been the Astra, it would’ve been much more successful as there would’ve been many less recalls). The previous Colorado didn’t sell, and I don’t see the newly introduced updated model selling any more. GM might as well just give up now and solely sell in Europe (as Opel/Vauxhall) and the Americas. This whole ‘world car’ thing that somewhat worked in the seventies doesn’t work now, especially in Australia (unless you’re Hyundai Kia, who have had moderate success with their ranges in the past five years or so). GM have screwed up and anything they do now is too little, too late. Ford are no better and only have the Ranger and Everest to prop them up now (there have been numerous reports of reliability issues with every other model except the Mondeo, which doesn’t sell enough to really count, much like every model other than Commodore in the Holden lineup). Mitsubishi is proof that once local production ceases, you are a shadow of your former self.
I don’t think Mary Barra and her top executives made a mistake pulling Chevy out of Russia . Putin and his government do not trust the West our our Nato Allies . His propoganda machine tells his countryman that we are all evil and not to be trusted and blames their poor performance in the economy on the U,S, ( which is correct ) .
On a regime that is focused on becoming what it once was , the USSR , using what they do have to finance this and the horror in Allepo , Syria, the population as a whole is having a tough time buying the essentials let alone a new vehicle .
GM can sit back and wait to see what will be a good time to get back into selling cars again in that country . And it may be a long wait , relations with Putin are as bad as it was during the Cold War . With the war crimes he is committing in Syria relations are getting frigid with us and Amb. John Kerry just announced today of more sanctions against Putin and his top generals . And thats not including his hacks against us and our Government .
I know this isn’t the right platform to be discussing politics so I won’t continue on that subject , but to answer the question posed I would say no !
If we talk about the war in Syria, in any war, people die. And often the innocent. But why is the American army can fight in Iraq, Afghanistan, Vietnam, too? A Russian can not fight in Syria? President Putin is not perfect, but he is strong and ready to answer for their deeds. And Obama? Think about it. The election will decide who will continue to talk to Russia. But this is politics.
A high quality American goods and sell worldwide. Russia is no exception. Ordinary people appreciate the quality of General Motors and willingly pay money for a great brand. Latecomer take place Hyundai, Kia, Skoda, Renault and Nissan. Why Opel and Chevy lose a good market and a lot of money. This is a business, not politics.
Well, Chevy had (relatively) high hopes for the Cruze in Russia – it was their third largest market in 2014 (big drop-off from China and the US, though).
Don’t know about other models, but Russia’s a big market -unpredictable on a number of levels. Kind of a coin flip at this point, it seems.
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