General Motors exits Russian car assembly business with Avtovaz deal

Avtovaz

Russia’s biggest automaker Avtovaz stated on Monday it would purchase out General Motors from their joint venture producing automobile in Russia under the Chevrolet brand, effectively finishing GM’s presence in car assembling in the country.

Russia’s auto market was among Europe’s lead performers prior to the imposition of western sanctions in 2014 which, coupled with decreasing oil prices, sharply weakened the rouble, boosted the cost of purchasing a car and curbed Russians’ ability to purchase new vehicles.

As a result, foreign automakers started to rethink their plans for doing business in Russia.

On Monday, Avtovaz signed an agreement to purchase GM’s 50% stake in the venture, which observes the two companies produce the Chevrolet Niva car from a factory located in Togliatti, a city on the Volga river.

Avtovaz did not reveal financial information of the deal which would put an end to GM’s presence in the car assembling business in Russia.

According to the agreement, the factory will keep producing and selling cars under the Chevrolet brand for a particular period of time before switching to the Lada brand of Russia.

Constructed in 2001, the Togliatti factory has the capacity to built up to 100,000 cars annually and produces the Chevrolet Niva, whose design was borrowed from the Soviet-era Niva by Avtovaz engineers and developed further with input of General Motors.

Russia’s automobile market had a hard time in 2019, with sales of new cars in November dropping by 6.4% year-on-year, the Association of European Businesses (AEB) stated last Thursday.

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