GM to build Hummers in Russia

[maybe some day...]

GM to build Hummers in Russia
Output of 200-400 of the SUVs set for Baltic plant to slake demand of wealthy Russians.
August 27, 2003: 12:27 PM EDT

MOSCOW (Reuters) - General Motors Corp. said Wednesday it will assemble its Hummer H2 sport/utility vehicle in Russia to target the country's growing business elite with money to burn and a need to impress.

GM (GM: Research, Estimates) signed a framework agreement with Russian automaker Avtotor at Moscow's annual motor show to produce 200 to 400 of the huge vehicles, which are based on the military Humvee, and hopes to begin selling them in November.

Hummer H2

The vehicles will be made at Avtotor's plant in Kaliningrad, a Russian enclave in the Baltic region.

The Hummer H2 has drawn the ire of environmental activists. It weighs about 6,400 pounds and has a six-liter V8 engine. It falls outside U.S. regulations on fuel economy, so its gas mileage is not rated by the Environmental Protection Agency.

"We expect our customers to be achievers who want to show off their success and follow the fashion set by Hollywood actors, or successful people who hunt and need to travel across difficult terrain," GM's regional marketing manager Pawel Widel told Reuters.

"It will be a very unique car in Russia, and Arnold Schwarzenegger is its icon, so it's a very strong and masculine image," he added. Tough-guy actor Schwarzenegger drove a Hummer H1, the predecessor of the current model.

The vehicle sells for $50,000 to $60,000 in the United States, but Avtotor Chairman Vladimir Shcherbakov said the Hummer H2 will sell for $85,000 to $110,000 in Russia.

"It's a niche product, so realistically 400 is the maximum we can hope to sell in a year. We don't have plans to produce thousands of them," he said, adding that the market for all luxury SUVs in Russia is only about 10,000 per year.

Avtotor currently assembles KIAs and BMWs at the Kaliningrad plant. All parts for the Hummers will be imported from the United States.

Shcherbakov said the company will invest another $70 million in the plant on top of $200 million already spent.

GM would not give any figures, saying the agreement is at a framework stage and that many details still need to be ironed out.

GM already makes cheap off-road Chevrolet Nivas at a $322 million joint venture with AvtoVAZ in the Volga town of Togliatti, and AvtoVAZ has said the plant soon will begin producing Opel Astras.

Widel said the Hummer H2, available in bright yellow and orange as well as the original black, meets all Russian environmental rules.

"It won't be long before you see them on the streets of Moscow and St. Petersburg," he said.
Copyright 2003 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.