In a statement, the carmaker said it would instead put the focus on the premium segment of the Russian market with Cadillac and US-built Chevrolet products such as the Corvette, Camaro and Tahoe.

“This change in our business model in Russia is part of our global strategy to ensure long-term sustainability in markets where we operate,” said GM president Dan Ammann. “This decision avoids significant investment into a market that has very challenging long-term prospects.”

The announcement follows latest Russian new car sales figures for February that show the market declined 37.9% last month.

Opel Group CEO Karl-Thomas Neumann said: “We do not have the appropriate localisation level for important vehicles built in Russia and the market environment does not justify a major investment to further localize.”

Under the changes, the GM Auto plant in St. Petersburg will halt production by the middle of 2015 and the contract assembly of Chevrolet vehicles at GAZ will be discontinued in 2015.

The GM-AVTOVAZ joint venture will continue to build and market the current generation Chevrolet NIVA.

GM’s global luxury brand Cadillac will be set up for growth in Russia over the next several years as it prepares for numerous product introductions.

GM added that Chevrolet and Opel will work closely with their dealer networks in Russia to define future steps while ensuring the company will honour its obligations to existing customers in the coming years.

“We had to take decisive action in Russia to protect our business. We confirm our outlook to return the European business to profitability in 2016 and stick to our long-term goals as defined in our DRIVE!2022 strategy,” said Mr Neumann.

By 2022, the company plans to raise its market share in total Europe to 8% and to reach a profit margin of 5%.