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GM Europe still looking to Russia for growth

GM Europe still looking to Russia for growth

General Motors is still looking to Russia and Eastern Europe for long-term growth to offset slackening demand in established markets despite international tension over Georgia, the president of GM Europe says.
Carl-Peter Forster said in an interview that sales growth in the region could moderate from the near 30 percent currently, but that GM could still expect annual increases in the region of at least 10 to 15 percent.
Last year, GM sold 523,000 vehicles in Russia, the former Soviet Union and the rest of eastern Europe. Just 10 percent to 15 percent growth in that region would still represent more than a third of the company's sales growth in western Europe, Forster said in an interview late Thursday.
The total market for the region is currently around 4 million vehicles, but could jump to 5 to 6 million vehicles in the next three to five years, according to Forster.
He said the current political tensions surrounding Russia and Georgia shouldn't dent sales noting that the West did not want "alienate" Russia.
GM _ which turns 100 next month _ has European brands that include Chevrolet, Cadillac, Saab, and Opel. It operates 10 assembly plants in seven European countries with about 56,000 employees and 9,000 dealerships.
GM said 65 percent of the company's sales are now from outside North America.
Forster said the company's strategy has always been to produce locally and that its going to open a third assembly plant to serve the Russian market in St. Petersburg later this year.
"Were looking to expand our manufacturing footprint, and the number of dealerships in the region," Forster said. "We have a good product portfolio and were coming up with new products and looking for products for the market conditions."
He would not elaborate on that those products are.
General Motors Europe sold nearly 600,000 cars in the second quarter driven by near 50 percent growth in Russia. The Chevrolet brand saw a near 20 percent jump in sales to 137,000. Overall market share in Europe was steady at 9.4 percent.
The company said its material and structural cost performance improved during the quarter, but the strong euro and economic slowdown in key markets including the U.K., Spain and Italy had an impact on earnings.
The European business saw about a 12 percent increase in sales to US$10.6 billion (euro7.16 billion) in the second quarter compared with US$9.5 billion in the second quarter of 2007. Its pretax profit dropped in the second quarter to US$99 million (euro66.8 million) from US$345 million a year ago.