Russia’s largest automotive manufacturer, AvtoVAZ, announced Monday that it plans to buy General Motors out of its regional joint venture. The duo previously assembled Chevrolet-branded automobiles for the local market; however, GM lost interest after the market took a turn for the worse.
While sanctions from Western nations and falling oil prices upended Russia’s economy a few years ago, it was already headed for hard times. Wages have stagnated and average citizens no longer possess the same level of buying power they held a decade earlier. The Russian Economic Development Ministry predicts just a 1-2 percent growth rate up to 2030 and leadership doesn’t seem terribly interested in improving the situation for the citizenry, deciding instead to raise taxes on just about everything. GM was probably right to get out.
According to Reuters, AvtoVAZ signed an agreement to buy General Motors’ 50 percent stake in the venture, which saw the two companies build the Chevrolet Niva from a factory in Togliatti. While the Russian firm did not disclose financial details, the purchase effectively leaves GM with nothing to do and ends its assembly commitments in the region.
The Togliatti factory will continue rolling out models under the Chevrolet brand for “a certain period of time” before switching to Russia’s Lada brand, according to the agreement.
The facility has a capacity of roughly 100,000 cars a year but it’s unclear as to how much of that cap will be utilized. The Association of European Businesses reported on Thursday that Russia’s new vehicle sales are down 6.4 year-on-year for 2019. Lada has also been struggling. In November, the company announced the sharpest decline it has endured in three years.
[Image: Evannovostro/Shutterstock]
GM is less and less of a global company.
And more and more of a Chinese national socialist possession.
:-/
GM is not alone – too many American companies declared their loyalty to Chinese communist government at expense of home country. For example Google refuses to cooperate with US military but nevertheless develops AI for PLA. Rich people – they send your kids to fight the wars and meantime take side of enemy to make more bucks.
Points taken about China, but they are ***not*** a communist country anymore. Totalitarian, yes, and their economy is centrally controlled, but it’s not a communist country.
Exactly Mike! “communist china”… yea, right. This is called state capitalism. Similar to Russia actually.
I see Russia more as a corrupt-o-cracy, if that’s a word. The people in charge are largely either controlled and funded by criminals, or criminals themselves. It’s UNBELIEVABLY corrupt.
Say what you want about China, but they do ***not*** put up with that s**t. They roll the mobile execution vans out for financial crooks there. If that were going on in Russia, there wouldn’t be anyone left to run things.
No country has ever been “communist.” Communism is just a marketing term for totalitarianism.
Oberkanone
GM believes in an all electric future. It’s pointless to continue partnerships that suck up valuable resources, and yield very little profit
Would anyone argue that the story of GM replicates that of the USA?
Growing to world dominance. Now in decline.
Due primarily to short sighted management and hubris.
I’d add “inevitable competition” to that list.
It was pointless in the first place. It was another stupid, expensive waste of money by the knuckleheads who run GM.
Honda can make weed whips that earn a profit.
GM is full of excuses.
Detroit-X
Is that why Honda is shutting down its 2 European auto assembly plants. So they could make more weed whips?
No. In closing the UK and Turkey plant, Honda is moving production to the US in that action. Let’s see GM do that.
It’s not that simple. Production is moving to Japan, China and the US. Cars intended for the European market will be sourced from Japan, partially because of a trade agreement between the EU and Japan. The UK plant is closing partially because of poor (and falling) Honda sales in Europe and partially because of the movement towards electrification which requires investment which the company don’t want to make in more countries than they have to.
Hecho en Mexico = GM
Oberkanone
Ford, FCA, Toyota, Honda, Nissan, Mazda, KIA, VW, Audi, BMW & Mercedes all have factories in Mexico
Old GM used to make some ‘interesting’ decisions based on their strong desire to be/stay the “biggest.” Apparently that pressure is off.
How big is GM now? I take it that they’re far below VW, Toyota, and the Renault Alliance, but have they been surpassed by PSA-Fiat, Hyundai, Honda or any of the Chinese? How small is Ford?
hope they learn about socialism after this debacle.
GM continues to narrow it’s focus to the most profitable models, and the most profitable markets. GM has withdrawn from Europe, Russia, India, Australia and South Africa. Korea and South America dangle. Meanwhile, GM North America abandons the market segments which are less profitable.
I’m sure it tickles the stock market pink. “Look at the rising transaction prices!!” “Look at the fattening gross margins!!!”
Somewhere along this road to maximizing ATP and GM, GM might lose the scale that amortizes their overhead.
GM has a very narrow scope of products today, and has to support 4 brands with that increasingly narrow set of products. Meanwhile they seem focused on getting every penny of profit, product be damned.
In 10 years I can see GM having 4 platforms total for all 4 brands of products with 2 maybe 3 engine families left.
The same management that put GM in bankruptcy is still in charge, they’re just trying a different tactic.
Hummer’s got it!
If electric doesn’t pan out… plus ca change, plus ca meme chose, or, to paraphrase Louis XIV (replace with Pres. T), apres moi, le deluge
I suppose ‘tickling’ is relative… check out a 10-year comparison of new GM’s stock price vs. the S&P500…
[do *not* add TSLA to the above historical view]
Toolguy
GM pays out annual dividends
“GM pays out annual dividends.”
Not for the 6 years leading up to 2014 they didn’t.
I count ~$9 of dividends from 2014-2019 – does this really change the story?
GM hasn’t “withdrawn” from Australia.
Hockey, Borscht, Vodka, and AutoVAZ!
/sorry
Fake News!
GM still sells Cadillacs, Tahoe’s, Suburbans & Traverses in Russia. AND THEY ARE ADDING DEALERSHIPS!
This is a great point. Auto VAZ is part of Renault. And whatever they did together with GM was small thing. GM bought Niva nameplate and old classic Niva had to be renamed to Lada 4×4
GM can comfort itself with the fact that it outlasted the Wehrmacht in Russia.
Whoops, duplicate post.
AvtoVAZ is a consolidated subsidiary of Groupe Renault. They make french cars (Dacia Logan etc. w Renault badge) already and will not need Korean GM vehicles.
I find no fault with GM pulling out of Russia. GM has made some bad and bone headed decisions but this is not one of them.
GM has been getting its as# handed to it by the Japanese and others for 50 years. The only reason it has lasted this long is import restrictions followed by a big fat bailout of their union pension fund paid for by the US taxpayer.
Most of GM’s products have been noncompetitive on quality and reliability for decades. Consumers are not fooled, regardless of GM shills and their endless self-delusion, denial and bullsh*t. GM has had chance after chance to turn things around. They have died once and they will die again. It’s a damned shame what union and management greed and corruption have done to a once great company.
thelaine
The Japanese have had every advantage
– lower labor costs
-New factories built after WWII
– A home market closed off to foreign competition
And support from the U.S automotive press
Results are mixed
Daihatsu, Suzuki & Isuzu have left the U.S market
Mitsubishi went broke and is run by Nissan
even the almighty Toyota had to shut down its Scion brand.
On a level playing field, the Americans will slaughter them like sheep.
The Japanese made and make cars that don’t fall apart on their own, plain and simple. American carmakers used to do that, but then in the 80s the companies were run by accountants like Roger Smith in hunt for “margins” and “efficiencies” and every corner that could be cut was cut. Never put an accountant in the CEO chair.
Mr. Gazis
This is precisely the sort of arrogance, denial and excuse-making that led to the fall of GM in the first place. You are right, Toyota is almighty, and GM is still failing and still shrinking, as it has been for 50 freakin years. Honda is another brand that has whipped GM. So console yourself by claiming it is all so unfair and gloating about beating the Daihatsu Charade. Congratulations, although the truth is that Honda and Toyota out- competed Daihatsu, Suzuki and Isuzu, not GM. All of their tiny cars were of better quality than the small cars made by GM. Their best shot was Saturn, which they abandoned after, typically, losing a boatload of money. Their other small cars were so bad, they tried importing foreign cars THEMSELVES, because even the idiots running the company realized they could not build a decent small car.
Here is the ugly truth:
1. GM decided how much to pay its workers.
2. GM decided not to invest in updating its factories.
3. Lack of foreign competition in its domestic market made GM arrogant and fat but made the Japanese embrace “continuous quality improvement” and inspire their workers to make it a sacred commandment.
In fact, it is the US that had every advantage, including decades of expertise, dominant market share, universally known brands, and American consumer national loyalty. They pis#ed it all away and now it is gone forever. People have had enough of being suckers and buying inferior cars while smarter people drive Civics around for 250 thousand miles. (Yes, I know your Uncle Chester had a Citation that lasted 900 thousand miles without so much as new wiper blades. More denial. American consumers know better. You can only bullsh@t them for so long.)
It was all short-sighted greed, arrogance, lying and denial, combined with a healthy dose of incompetence and corruption. Good riddance, GM. F.U. and the politicians who gave away 23 billion taxpayer dollars to your corrupt union. You died once and you will die again and you have no one to blame except your greedy and corrupt unions and management. You will not be missed.
That car on photo looks like Lada and most likely it is a Lada. You can call Lada Chevrolet or Cadillac it still will be Lada. You can fool people just for so long before they figure it out. So everything is okay, nothing changed actually.
Don’t be dramatic – what you see it Chevy Niva
Well Niva is Lada. What Chevrolet have to do with it?
No wipers, no mirrors, rear visibility that makes you wish for a camaro, and a windshield almost flat for huge heat gain in the summer and poor visibility. Also see youtube video on towing with a model_x . . . 1.5 hours of charging for every two hours of driving,
TTAC, thank you for not equating the sign to a ‘small child’, like some other media outlets did.