Gm Avtovaz
Introduction
GM and Avto VAZ were sitting down to finally negotiate a deal that they had originally committed to in 1999, to jointly build and sell Chevrolets in the Russian market. This car market was expected to account for a significant share of global growth over the next decade. GM felt pressure to jump on board or miss the opportunity. Other auto makers were already on the move. Ford, Fiat and Daewoo were already exploring their own opportunities in Russian and GM did not want to be left out in the cold. However, things were not going to be easy due to a weak economy, turbulent car market, legal problems of Avto VAZ related to tax evasion, the fact that Avto VAS was horribly inefficient at building cars, and a divided showing of support at GM’s home base. All of these complications could prove to be too much for even the GM powerhouse to overcome. Some GM leaders were pushing to share the risk with another automaker. Which is where Adam Opel, GM’s European division comes in. David Herman was previously the Chairman for Adam Opel which he hoped, would make convincing them to buy into the venture easier. Time would tell if luck would be on his side.
General Motors
GM founded in 1908, was the largest automaker in the world. GM managed operations in over 50 countries and sold over $160 billion in sales with $4.4 in profits in 2000. Not all was well for GM due to the fact that their market share had been shrunk to a mere 13.6% of the global market share with Ford nipping at their heels with 11.9% and Volkswagen with 11.5% market shares respectively. Russia was considered an unclaimed territory that all automakers had their eyes on.
Russia Auto Industry
Russian Automobile industry was way behind the curve of the rest of the traditional auto industry regions (Western Europe, North America and Japanese). Russia had many good intentions, but many problems as a country. Revolving economic problems and poor management prevented them from being able
GM and Avto VAZ were sitting down to finally negotiate a deal that they had originally committed to in 1999, to jointly build and sell Chevrolets in the Russian market. This car market was expected to account for a significant share of global growth over the next decade. GM felt pressure to jump on board or miss the opportunity. Other auto makers were already on the move. Ford, Fiat and Daewoo were already exploring their own opportunities in Russian and GM did not want to be left out in the cold. However, things were not going to be easy due to a weak economy, turbulent car market, legal problems of Avto VAZ related to tax evasion, the fact that Avto VAS was horribly inefficient at building cars, and a divided showing of support at GM’s home base. All of these complications could prove to be too much for even the GM powerhouse to overcome. Some GM leaders were pushing to share the risk with another automaker. Which is where Adam Opel, GM’s European division comes in. David Herman was previously the Chairman for Adam Opel which he hoped, would make convincing them to buy into the venture easier. Time would tell if luck would be on his side.
General Motors
GM founded in 1908, was the largest automaker in the world. GM managed operations in over 50 countries and sold over $160 billion in sales with $4.4 in profits in 2000. Not all was well for GM due to the fact that their market share had been shrunk to a mere 13.6% of the global market share with Ford nipping at their heels with 11.9% and Volkswagen with 11.5% market shares respectively. Russia was considered an unclaimed territory that all automakers had their eyes on.
Russia Auto Industry
Russian Automobile industry was way behind the curve of the rest of the traditional auto industry regions (Western Europe, North America and Japanese). Russia had many good intentions, but many problems as a country. Revolving economic problems and poor management prevented them from being able