- Posted on Thursday, April 20th, 2006 at 9:43 am
We’re Humming Along in Russia
Bob Lutz at the Kaliningrad plant earlier this monthBy Dee Allen
Staff Director, Global Product & Brand Communications
Russia’s middle class is rapidly growing, and with that comes the desire and ability to buy a new car. Sales of new foreign cars in Russia were up 60% last year compared with 2004 figures. Chevrolet is now Russia’s No. 2 foreign brand. In the first quarter of 2006 alone, 26% more Chevy cars and SUVs were sold in Russia than in the same time last year.
And General Motors, in partnership with Russian automaker Avtotor, can’t put the cars together fast enough. We are substantially increasing both production and range of our Chevrolet, Hummer and Cadillac models available. The vehicles are assembled from imported kits at the Avtotor factory in Kaliningrad –- a small Russian enclave and a center of Russian economic innovation.
This month, the first Hummer H3 rolled off the assembly line, with our own Bob Lutz on site. He said, “We see Russia as one of the highest potential growth markets for GM around the world. In fact, during the last couple of years we have witnessed the Russian car market’s strong growth and consumers’ increasing interest in vehicle choice.”
So, if you want to buy an H2 or H3 in Russia, for now you’ll have to visit one of the six authorized dealers in Moscow, St. Petersburg and Yekaterinburg. More to come.
23 Comments
Tim Geisler
Changbaishan… i hate to break it to you, but investors would like to see hummer sized gains in any share… but likely you wont see it.
for once i wish GM didnt care about investors… they must focus on the customers…
if GM sells more cars its more profitable… so the investors are happy…
Carl
First, I want to congratulate you for posting a lower loss than expected. Second, I would suggest you propose that sports cars will become the daily commuter car of choice. They consume less space and fuel and are more responsive. There is no way you are going to get Americans in small economy cars as a commuter car. The sports car has promise and GM already has product with the Saturn and Pontiac brands. Unfortunately, GM has wasted billions on new SUV’s that are out of touch with today’s needs.
SteveG
Thats great.
Lets see-GM is doing good in Europe, great in China, but lousy in the U.S.
Know why? The vehicles you make in the US are the ugliest in the world.
EVERY picture I have seen of your foreign vehicles (Opel, Buick China, Brazil, etc etc) are much better looking inside and out than the vehicles GM sells in the US.
Are the designers in the US inept? Blind?
I see no sign of any talent in your US staff. Absolutely pitiful efforts.
tom
Ah…so that’s why gas prices keep going up…you’re selling fuel-inefficient vehicles like the Hummer in Russia.
My sarcastic thanks for you and your company for your contribution to carbon dioxide emissions!
Buick Diesel
Yes, I agree with Tom. According to Consumer Reports, a Hummer is grossly impracticle.
Recent Saab buyer
I wish I could get immature thrills by by signing on to GM blogs and taking cheap shots at the company like the above posts…my IQ would be much lower and life would be a lot simpler.
Keep making regular and flex fuel SUVs.
1) You must drive a hybrid for 10 years to recoup the purchase price premium (vs. a regular vehicle) via expected fuel cost savings.
2) It will not take very long for Western Canadian oil to be brought to market now that it is profitable to do so. BTW, we’re talking 180 billion barrels, 70% of Saudi Arabia’s current reserve.
3) Did I mention that the cat is out of the bag on hybrids?, i.e., they’re between 10% ans 25% less fuel efficient than OEMs claim.
CaptainDan
A vehicle being “practical” doesn’t mean it gets the best gas mileage. It means it is the most “useful”.
Sure, a little Solstice could be a great commuter car. But what if I have kids? Then it is not practical. I need a back seat. More kids? You want to bring home the groceries? You want to be able to haul some lumber home to build that shed? You want to be able to make it down the street after it snows? What if I just want to pay for some styling I prefer?
Do you think every family should have fifteen vehicles, so they can select the perfect vehicle for the precise use you’re going to put it to that day? While that would be great for GM, it is not practical for the family. The most practical vehicle is the one which can best handle my particular uses which may crop up during the time (a couple years?) that I own the vehicle. For a lot of people, an SUV is the most practical vehicle they could have.
Keith
How many of you even know where Kalinigrad is? It is on the Baltic, as European as the Russian Federation gets. There are investors who prefer to concentrate their emerging market investments to BRIC, because they feel that is where the growth is most guaranteed. BRIC stands for Brazil, Russia, India, China. It seems to me that GM is doing quite well in three of these four countries, and may be moving to improve its standing in India.
I had an employee who grew up in Russia. He is smart, upwardly mobile, and very into 4WD and off-road vehicles. He gets many Russian off-road magazines. Hummer seems like a good brand to capitalize on the combination of off-road enthusiasts who are up and coming entrepreneurs in Russia and other East European countries.
A Hummer may not be the best choice for someone who commutes 20 miles each way every day (like I do), but then a Prius is not the best choice to take hunting elk in Siberia. Everybody has there desires. I want to see GM find a way to profitably satisfy as many as possible. Not just the tree huggers on the West Coast of the US.
To SteveG I would point out that GM is bringing Opel to Saturn, and improving the interiors on the other brands. I also discern increased attention to really focusing the various ‘makes’ in their own direction. Several years back I read my Annual Report. It was bragging about the clear differentiation between brands among pictures of the same cars with different badges. That lip service seems to be dying off, which is quite welcome news.
-Keith
SteveG
I’m glad to here that they are improving interiors, but can GM promise me they will change the malibu’s interior next year and not in 4 years? How long did it take Cadillac to change the CTS and SRX dreadful interiors? I here next year is the time, but it should have been 3 years ago.
As for Saturn, I know Opel will be influencing their new designs, starting with the Aura. The concept was a big hit and now the production model comes out and what do they do? Dumb it down, like everything else except the Soltice and Sky, they dumbed it down.
The front end in the concept had a honeycomb grill, now its horizontal bars. The fog lamps look like it has droopy eyelids. The Wheels are ugly. Fake wood in the interior!? Find me an Opel with fake wood, or a Camry even.
These are easy fixes and everyone on the internet have been saying the same things I am. Will Saturn fix them before the car is sold? I’ll bet you $1 million they won’t.
Lazy company, untalented designers.
Thats the problem with GM.
And raise the damn warranties already-the ship is sinking partly because of design woes, mainly because people dont trust your cars to last past 3 years.
Raise the warranties.
eaton53
“Second, I would suggest you propose that sports cars will become the daily commuter car of choice.”
I do this very thing, driving a Miata on my lengthy commute to work. It’s economical and a heck of a lot more fun than a boring Prius, especially on a beautiful spring day like today. If I were buying a sports car today, it would be a Solstice or Sky, hands down.
We take my wife’s Cadillac when we need more room.
Edward Hayes
Well I was always optomistic about General Motors, now it looks like Wall Street shares my enthusiasm.
Congratulations GM on a super quarter.
1. Revenues up 14%, that’s $7.5 billion addition makes GM one of the fastest growing companies in terms of aggregates, that’s $30 billion for the year if this continues.
2. A profitable Europe for the first time in 6 years.
3. Cut incentives by 25%.
4. Sales up in China 76%
5. Record production for the first quarter worldwide of 2.2 million vehicles.
6. Worldwide consolidation of the product development budget.
7. Improving cash reserves. Not the “burning up cash lifeline” myth feared by some.
8. Huge cost savings set to kick in by the second half of the year.
9. Increasing product development expeditures with 20 new domestic models for 2006.
10. The successful launch of the GMT900’s with the second wave of new pick-ups coming later in the year.
GM I told you, you’re on the right path, you are going in the right direction.
Now here is the proof.
Congratulations.
nan
It would be nice to see GM design vehicles that:
1. Had a silky smooth, high revving 4 cylinder engine for the Solstice/Sky a la Honda VTEC.
2. Actually put a truly supportive seat in their trucks, suvs and cars so that it didn’t feel like fabric covered throw pillows.
3. Moved forward with their vehicle design instead of lagging numerous years behind other automakers.
Jeff Crew
Congratulations on producing your great vehicles in Russia. I can’t believe that some people knock you for building SUV’s when that is what people want. The other thing I am bothered by is the media saying that with the high gas prices you guys will be in trouble. Please crank up the PR machine and pump the media with HHR, Cobalt, Aveo, Saturn Greenline, and G5 facts. These are new products in the compact segments that get good fuel economy, safety, and style. You have a balanced portfolio that needs some work in the midsize area. The Aura is a great step forward. I hope this is the turning point for GM.
Jay Smoth
Congrats GM. You have to go as far as Russia and China to find a market still willing to support your cheaply built cars. Thrown in the towel in the US, eh?
Carl
I read that Saturn is bringing out the Vue Green Line as a hybrid that will be $2K more than the regular Vue. Congratulations on great thinking. In reaction to the post that one needs a back seat for extra passengers the Vue gives a good choice for one parent and the other parent can drive a new Sky. When the children have a babysitter, a good romantic evening can happen with a sports car for efficient transportation for two people.
Carl
I posted earlier about the Saturn Vue Green Line and was highly complementary. Something told me remember the past products of GM. I should have me read more. I did and found out that GM is making a mild hybrid not a true hybrid. Just like the 1980’s when you brought out one or two fuel injectors instead of one for each cylinder and called it TBI or cross-fire fuel injection. The give them cheap crap culture of the Roger Smith GM era is still alive. While I was tempted to get this vehicle, now I am totally out of the market because of this ploy of giving the customer an illusion rather than the real thing.
eaton53
Carl, if they did what you want it would cost $6K more than a standard VUE instead of $2K. There’s no chance of making back $6K in fuel savings, but $2K is quite possible.
So, do you actually want to save money or just look like you do?
Carl
Eaton, I do not approach buying a vehicle like a kitchen appliance. To me engineering, reliability, and sophistication are a major factors. For me to get the true cost of ownership I have to figure in resale value. Since we do not know the cost to be 6k as you said the discussion can’t take place. However if you are right, the vehicle still might be under 30k and the vehicle would be more desirable and might have higher resale value. Therefore, for me a true hybrid is more desirable.
CaptainDan
This thread started with an item about selling Hummers in Russia, followed immediately by complaints about selling that type of vehicle there. Russia isn’t heavily developed (paved) like the US or Western Europe. It seems to me that a Hummer is the most practical vehicle to use there. What do want? GM to try to sell Cavaliers to a market that demands Hummers?
Don’t be complaining that a car company makes cars that YOU don’t want. If the CUSTOMERS don’t want it, it doesn’t sell. Then the company makes something else, or nothing. And last time I heard, the Hummers were selling quite well.
MK
If Toyota can make big profits with just TWO brands: Toyota and Lexus and with a few (8-10) models, why GM has to have too many brands and models. These many brands and models require tremendous resources which are hard to sustain with 23% market share. GM can start by eliminating “Pontiac” and reducing some other models.
Bill
I think that the H2 needs a shot of publicity. All we are hearing is H3 H3.
I want a Hummer with a Duramax Diesel engine but nope GM doesn’t think it would sell. What they don’t realize that with all the aftermarket parts for a duramax I could drag race Mustangs and win.
Why is Hummer not planning a model change on the H2 until 2012? I will not buy a Hummer until I can get it with the Duramax! I will take my 65k and buy a classic muscle car and watch it appreciate.
Ford Festiva User
It shocks me to observe the US obsession with SUV’s. Are your roads so bad that you need an SUV in the suburbs? A hatchback with roof racks can carry decent loads and if your cities were designed with shops closeby you wouldn’t need to buy a truck. Just imagine if GM thought outside the square they would not have to retrench so many. Profit sounds good but they do not factor in the externalities such as pollution, loss of amenity as a result of their cars, or the contribution they make to helping us in the US as being embarassingly seen as fat nation number one.
ChevyRox
While Toyota is gaining market share with fewer models, I think that having fewer models is not the key to a winning strategy for GM. Catering to the needs of multiple customer segments with affordable, good looking, reliable products is. Not every one wants a hummer and not every one needs a pickup truck. That is why there are different types of vehicles available in the market and sold on a daily basis. Finding the right mix, right price and right market is the challenge to this company and key to its survival for the next decade.
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