FRANKFURT--Opel, the German unit of General Motors Co., plans to
reorganize its operations in Russia where demand for new cars has
slumped amid a worsening domestic economy marked by the falling
value of the ruble and economic sanctions imposed by western
countries.
"Last year Russia was our third largest market after the U.K and
Germany [but] now this market is embroiled in serious turbulence,"
said Karl-Thomas Neumann, the head of Opel, said on Tuesday.
Tensions and sanctions related to Ukraine crisis and Russia's
limp currency have been a source of increasing concern to European
companies, in particular German car makers that do significant
business with Russia. Earlier this month, Volkswagen AG said it
would reduce production at its Kaluga, Russia, plant for 10 days
due to economic weakness.
"We believe in the long-term potential of Russia, but volumes
and prices are under considerable pressure at the moment and the
ruble continues to lose value," Opel's Mr. Neumann said.
He said the turmoil will continue to influence Opel's results in
the region, so the company is taking measures now to minimize the
effects, and is keeping an eye on market developments.
Opel will scale back operations at its St. Petersburg plant to
one shift, and offer employees a severance package, it said. The
car maker will also intensify its concentration on local suppliers
"to better serve the plant's needs," Opel said.
Opel is also appointing Susanna Weber to head operations in the
country, effective immediately. Until now, Ms. Weber was
responsible for purchasing and logistics at Opel.
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