FRANKFURT General Motors (GM.N) will build a small number of its Opel Corsa hatchbacks in Belarus from next year as its European brand seeks to diversify outside its core market.
Opel, known as Vauxhall in Britain, said on Thursday that parent GM signed a deal to assemble the subcompact car from semi-finished kits at the Minsk factory of British-Belarusian company Unison.
Initial plans call for a series of 7,000 cars in the first full year of production, for sale in Russia, Belarus and Kazakhstan.
Assembling vehicles in this way is a common and inexpensive way for carmakers to circumvent import duties. Only a small amount of work is done locally, with the bulk of the manufacturing process carried out at home - in Opel's case, at its Eisenach and Zaragoza plants in western Europe.
The deal is for production to continue into 2017, with an option to add further models.
"Building the Corsa in Belarus is part of our strategy to make cars where we sell them. The supply of assembly kits to a growing market also means additional utilization of our capacities in Eisenach and Zaragoza," Opel production chief Peter Thom said.
GM's losses in Europe more than doubled to $1.8 billion last year and it expects only a slight improvement in 2013, with car demand near 20-year lows.
Apart from Russia and Turkey - the only two big growth markets where Opel maintains notable operations - the business depends mainly on demand in western European countries such as Italy, France and Spain, where overall car sales have plummeted.
Overcapacity problems in Opel's western European plants has led to speculation that the Mokka SUV could soon be built in Zaragoza, Spain, and the Chevrolet Cruze in Opel's Polish plant in Gliwice, rather than South Korea.
(Reporting By Christiaan Hetzner; Editing by David Goodman)