GM

Automakers Are Quitting Russia Due to Currency Collapse

Invading Ukraine and just being Russia has consequences.

Economically speaking, things aren’t looking too good lately in Russia. If you didn’t already know, the country’s currency, the ruble, pretty much collapsed late last week. Clearly that’s not good and Russia itself as well as its citizens aren't the only victims. As of now, General Motors, Audi and Jaguar Land Rover have stopped selling cars in good old Mother Russia. Automakers in general have been concerned about the Russian market since last summer, as they were battling a more than 40 percent drop in the value of the ruble.

This is worst financial crisis Russia has faced since 1998. Invading Ukraine apparently also has economic consequences. Anyway, automakers are now trying to figure what to do next. They need to figure out how to price their cars for this market all over again. GM also made clear that it will deliver cars to owners who’ve already made their purchases at the agreed-on price. Others aren’t so lucky. Over the past several weeks, Russians who had the means and foresaw the crisis were quickly converting their savings into something tangible, such as Porsches. Automakers that haven’t halted Russian sales, like Toyota, will now begin to implement price increases to adjust to the new market conditions.

BMW, however, may lose as much as $123 million to $185 million in fourth quarter earnings if the ruble ends up losing half its value. Volkswagen is also making pricing adjustments, and it will temporarily stop production at its plants in Kaluga for the time being.

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