GM exit from St. Petersburg simply for economic reason, says Russian union boss

The head of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin has claimed a simple lack of demand is the very reason behind American auto maker General Motors' decision to close its St. Petersburg production facility in mid-2015.

Shokhin made the statement in responding to rumors that GM had faced pressure from the White House and U.S. State Department to divest from Russia in view of ongoing tense diplomatic relations between the two countries, arguing that GM's move was understandable in terms of "pure commerce," according to ITAR TASS, a major news agency in Russia.

GM also announced plans to change its business model in Russia Wednesday at its website.

According to a document posted at the GM website, the changes will include focusing on the premium segment of the Russian market with Cadillac and U.S.-built iconic Chevrolet products such as the Corvette, Camaro and Tahoe. Also, the GM Auto plant in St. Petersburg will halt production by the middle of 2015 and is planning to idle the plant.

Despite the obvious negative consequences of the GM decision for those directly affected as well as for the Russian economy as a whole, Shokhin believed GM's decision could benefit local auto producer AvtoVAZ, which is well placed to pick up some of the market share left behind by GM, one of several leading foreign auto firms with production facilities in St. Petersburg, Russia's northern capital. Endite