General Motors Co.
) revealed that it is reassessing the expansion timing of its
Russian plant near St Petersburg. Notably, the automaker had
invested $300 million in the plant in 2008 and plans to initiate
the second phase in 2015. However, the prevailing weakness in the
Russian auto market has compelled the company to reconsider its
General Motors' Russian unit manufactures Chevrolet Cruze, Opel
Astra, and Chevrolet Trailblazer. However, the automaker did not
name the models it plans to manufacture during the second stage.
Recently, General Motors stated its intentions to reduce production
at the plant due to the present slump in the Russian auto market.
Vehicle sales have declined in Russia due to lower economic growth,
which adversely affected consumer demand. Further, customer
sentiment was affected by the conflict in Ukraine. Considering the
latest evaluations, General Motors has disclosed that this plant
will be operating for four days in the month of August and another
four days in September along with eight days in October.
As per data from the Association of European Businesses, the
Russian auto market has been recording declining sales since Jun
2014. In August this year, sales dropped 17%, while July sales
deteriorated 23%. Furthermore, General Motors' Chevrolet vehicle
sales fell a substantial 45% year over year in July, while Opel
sales plummeted 25%.
Apart from General Motors, other automakers are also facing the
brunt of a sluggish Russian economy. In response to the current
downturn, Ford Motor Co. (
) called off a $329 million investment plan for its Russian joint
venture with OAO Sollers in the second quarter after it announced
plans to retrench 950 positions at two of the partnership's
General Motors currently carries a Zacks Rank #3 (Hold).
Better-ranked automobile stocks worth considering include Tesla
Motors, Inc. (
) and Fox Factory Holding Corp (
). Tesla sports a Zacks Rank #1 (Strong Buy) while Fox Factory
carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis Report
FOX FACTORY HLD (FOXF): Free Stock Analysis
To read this article on Zacks.com click here.