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GM slashes Russian working week due to crisis

General Motors is shortening the working week at its new plant in Russia as the global financial crisis continues to squeeze the US major's car sales in emerging markets, the company said.

“We've shortened it to three days per week for the next few months,” GM's spokesman in Russia, Sergei Lepnukhov, said.

“Like all automakers, we are of course feeling the impact of the crisis and the fall in demand.”

The global credit crisis led many Russian banks to stop granting affordable car loans, causing a sharp contraction in demand for cars.

Rising unemployment, wage arrears and the creeping devaluation of the ruble have since exacerbated the problem.

Russian sales of GM's popular Chevrolet brand fell 11% year-on-year in November, followed by a 6% decline in December, the Association of European businesses said.

GM spent $300 million building the new plant in the city of St Petersburg and started production there in November, with an annual capacity of 70,000 cars. Lepnukhov said GM was sticking to its plans for raising capacity to 100,000 cars by 2012.

Analysts have forecast declines of between 19% and 50% in car sales in the Russian market this year.

The world car industry faces an uncertain future as tight credit conditions and deepening consumer uncertainty cripple sales. All major automakers reported double-digit declines for US auto sales at the end of last year.

GM rival Ford Motor Co restarted its Russian assembly lines last week after a one-month suspension brought on by weak demand.

GM, Ford and Chrysler - known as the Detroit Three - have all been badly battered by the crisis, turning to Washington for bailout funds last year. (Reuters)