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Business news, 02.04.2007 13:24

GM Europe increases capacity investment in new St Petersburg assembly plant to $ 300 million

carindustry The Novosti news agency reported this morning that General Motors will invest $300 million in the new car assembly plant near St. Petersburg that it launched in June 2006. The plant is due to reach its full capacity in 2008, when assembly of the Chevrolet Captiva and other models will be launched there. Earlier, GM had indicated its investment in the plant, initially planned to produce 25,000 units annually, would be just $115 million, but on March 29, GM Europe President, Carl-Peter Forster announced that GM would more than double its originally planned capacity to 70,000.

"Russia is our biggest market for Chevrolet in Europe," said Mr. Forster. "Demand continues to grow, and we will be in an even better position to meet that demand when Shushary goes on stream in 2008." In 2006, GM sold more than 132,000 cars on the Russian market, 84% of which were Chevrolets. In the first two months of 2007 the company sold almost 26,000 GM cars in Russia, including more than 20,000 Chevrolets.

Elsewhere in Europe, GM does not exclude further reductions in manufacturing personnel, though Mr. Forster described the possible closure of a plant as an ‘extreme solution’. GM Europe lost $225 million after exceptional costs last year on turnover up 4% year on year of $33.2 billion; before exceptional items, trading profit was $227 million. Having stripped out some $2 billion of fixed costs under its current restructuring plan, GM Europe is focusing more on raising sales volume at present.

The decision on which plants will build the next Astra models (on which hangs the future of the Ellesmere Port plant) is likely to be made before the end of this year, according to several financial media reports of 30 March, which also reported Mr. Forster saying that some Saab 9-5 model production would be moved to the Rüsselsheim Opel plant from Trollhëttan in Sweden.

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