Car makers are applying the brakes to their business in Russia. Sales fell 38 percent last month according to data from the Association of European Business. The year-on-year drop follows a slump of 24 percent in January.
Demand has dwindled as the economy weakens battered by Westeren sanctions over the Ukraine crisis and sliding oil prices. The tumbling value of the rouble has also led to a hike in the price of imported vehicles.
South Korea’s Ssangyong Motor has suspended sending cars to Russia on the back of demand dropping. Exports fell 41 percent last year. It has no local production base in the country.
US giant General Motors has announced it will shut a factory in St. Petersburg and wind down sales of its Opel brand and most Chevrolet models. The move could cost more than 1,000 people their jobs.
In a statement GM said the decision avoids investment into a market , “that has very challenging long-term prospects.” Three years ago Russia was one of the five top global markets for Chevy brand sales.
Nissan announced earlier this week it was suspending production in Russia for 16 days this month.
The Kremlin has reacted to GM’s decision saying the US firm will miss out when the market returned to growth.
“We can express our regret but on the other hand there never is a vacuum in the market, if one company leaves others will fill this gap,” Dmitry Peskov told reporters.