Filed under: Bad news, Competitive strategy, General Motors (GM), India, China, Russia, Toyota Motor Corp. (TM)

By most accounts Russia will be the largest car market in Europe sometime within the next five years. General Motors (NYSE: GM) sells about 250,000 vehicles in the market, but is anxious to get a stronger foothold. Things have not worked out.

Several companies have been competing to get a piece of Russian car maker Avtovaz. Yesterday, Renault announced that it would pick up a 25% interest in the company. According to MarketWatch, the European car company will pay $1.25 billion for its stake.

The announcement is a blow to GM, which has to increase its sales overseas. The U.S. car market is slowing and is expected to drop as much as 7% next year. The No.1 U.S. car company also faces increasing domestic competition from Toyota (NYSE: TM) and Honda (NYSE: HMC), so it faces smaller share in a shrinking market.

GM has had real success in China where its is the leader in car sales along with VW. But, local car manufacturers want a larger slice of sales there. GM’s vehicle business in Europe is mature. That leaves South America, India, and Russia as the largest potential markets.

In October, GM’s share price was up 40% for the year. Due to a fear of falling North American sales, it is now down about 8%. It needed the Russia deal.

Douglas A. McIntyre is an editor at 247wallst.com.

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