Automotive opportunities in Russia

An Expert's View about Parts and Accessories for Automobiles in Russia

Posted on: 1 Sep 2010

Latest overview of market potential for the automotive sector in Russia.

Sector briefing (Last revised August 2010) Automotive Opportunities in Russia Russian vehicle components industry is just Why Russia? capable of 1-1.5 million vehicle sets. Russia is the world?s fastest-growing The Russian Government expressly promotes automotive market today, and is one of the investment in the Russian automotive perspective autocomponent markets in Europe. industry, particularly in the components segment. So far from 120 global leading Automotive industry upswing is one of the components suppliers only 46 work in Russia, key objectives of the Russian Government more prefer to enter JVs but some open their during the ?Automotive Industry Development own facilities. Strategy up to 2020? with the projecting allocation of 584,1 bln rub for the programme. Government of the Russian Federation attracts foreign OEMs to set local Post crises development of automotive industry Industrial assemblies by bringing down in Russia just started at the beginning of 2010 import duties for subcomponents, offering plots with the sales of passenger and light of land for industrial development with existing commercial vehicles grew by 9%, or 79.211 infrastructure, legal assistance for setting the units, as compared with the same period of manufacture, tax remissions. 2009. In July 2010, sales growth amounted to 48%, or 55.907 units, as Find general information on Russian market compared with the same period of 2009. It is conditions on UKTI?s website. The Doing obvious the demand for vehicle components of Business Guide for Russia gives an overview of automobile production enterprises is not heavy Russia?s economy, business culture, potential and so far foreign components-related business opportunities and an introduction to other turns out to be unprofitable because of low relevant issue. cycle. According to the forecasts, Russian ?Russia?s car production automobile market is going to produce 3-3.5 market is expected to reach million vehicles per year by 2014-2015. However, nowadays, production capacity of 3.5 mln units by 2014-2015? UK Trade & Investment Sector briefing: Automotive opportunities in Russia Opportunities initiatives among the group of interests which The development of Russian automotive soon will be recognised as the legitimate claim industry is one of the top governmental to the authorities. Measures to prevent low priorities for the following 10 years. Therefore, quality and grey component imports will allow automotive market of Russia is reach with international component manufacturers to take opportunities for UK automotive businesses: the niche in addition to serving OEMs ? this will make up the necessary (and excessive) Autocomponent manufactures/JVs volumes for them to be able to work in Russia. RF Government actively supports creation of LCV technologies special economic zones and automotive clusters, introducing privileges and preferences There are several LCV projects currently for residents. Among them: undertaken in Russia, which demand - exemption from the property tax technology and engineering/test expertise. and the land tax for a period of up to five years, ?City Car?, the company of Michael Prokhorov, - reduction of the profit tax by up the head of the group "Onexim", plans to start to 15.5%, plant building for manufacture of a low budget - introduction of the free customs city car with hybrid engine in Togliatti at the zone mode, beginning of 2011. Capacity of the car plant at - list of privileges and preferences the first stage will make 10 thousand cars per provided for by regional year and about two thirds of components will legislation. be of the Russian manufacture. Serial Foreign component suppliers have been production of hybrid cars is planned to begin in implementing various entry strategies. JVs the middle of 2012. Till the end of this year the have been established between international platform on which 3 models of cars will be and Russian component manufacturers, while produced will be presented: cargo, passenger foreign OEMs preferred to go for green-field and a sport car. investments. Some major OEMs, like Toyota, Hyundai and VW, have opted for bringing in ?Sollers? company together with the their traditional suppliers to preliminarily innovative-consulting company "Corporation arranged supplier parks next to their own "Kompomash? developed an electromobile on assembly facilities. the basis of the model Fiat Ducato. 2 unique electro engines developed by ?Corporation The list of Automobile clusters today includes "Kompomash? which rotate forward wheels are North-west region: Saint-Petersburg established under the cowl of Ecobus. Peak automobile cluster, the place of concentration capacity of each electro engines is 40 kW. of the automobile production companies like There is a block of lithium-ionic batteries which Ford, Toyota, Nissan, Hyundai, GM; Kaluzhsky are charged from the household electric and Moskovsky automobile clusters, where system. Today its reserve is 180 km however Volkswagen, Citroen-Mitsubishi, Renault and in the long term this figure can be increased. Volvo are located; Volga region cluster with In salon there is no a habitual change-gear Autovaz and GAZ-Group. lever instead of which there is a joystick of The autocomponents? cluster development engine management. The uniqueness of the programme is valued £800-1000 bln with the created electric drive is that it allows to 10 years for the realisation period. recuperate over 90% of braking energy and it reduces power consumption in ?city cycle? by Secondary car market ? spare parts 30-50% and correspondingly it allows to reduce the volume of lithium-ionic Aftermarket is filled with low quality grey accumulators which cost makes about 70% imports from Asia, which are extremely cheap from the electromobile price. In the second and therefore sell extremely well and is quarter of 2010 Sollers started serial therefore almost not accessible for UK (and production of Fiat Ducato with all wheel drive other reputable) component manufacturers. developed together with the French company Federal Government needs to recognise and Dangel. In the first half-year the automotive tackle the issue officially. There are some holding Sollers realised 5222 Fiat Ducato cars UK Trade & Investment Sector briefing: Automotive opportunities in Russia that is 2 times over the last year"s index drive car. The project is worth 10 bln rubbles. (+115%). Moreover, only in June, 2010 1413 Also there are works at two most expensive cars were transferred to consumers, that is an projects of the investment program of KAMAZ - absolute record of monthly sales during the cabin and an all-wheel drive car. KAMAZ whole time of presence of Ducato in the arranges the first assembly enterprise of its Russian market. More than double sales growth cars and special vehicles in Russia - in of Fiat Ducato allowed to strengthen positions Khabarovsk. Assembly manufacture of of this family of commercial cars in the Russian designed capacity of 200-250 cars per year will market considerably which share increased settle down on the basis of the largest car from 5.5% in 2009 up to 9.7% in 2010. In the centre "KAMAZ" in the Far East. Rotational fourth quarter of 2010 one more novelty will be camp buses, vehicles with manipulator cock introduced in the market - chassis Fiat Ducato devices, isothermal vans, onboard vehicles and with unary and double cabin. Also this year the some models of other kinds of vehicles of joint project of Sollers and Fiat Professional of KAMAZ will be assembled in Khabarovsk. adaptation of petrol and bi-fuel engines made by Zavolzhsky engine plant for Ducato will The JV project will be completely realized reach its final stage of realization and the within 6 months - till the end of October, 2010. ready car equipped with the Russian engine is According to calculations of experts, it will be planned to be introduced in 2011. paid off within three years. Design and Advanced engineering ?GAZ Group? is planning to begin manufacture of new power units which design AVTOVAZ will present 11 Lada cars, including features make it possible to achieve indexes two perspective developments at Moscow Euro-5 and Euro-6 without essential expenses International Motor Show-2010, the press at the Yaroslavl engine plant (OJSC centre of AVTOVAZ informed the agency "Autodiesel") in 2010. The complex producing "AUTOSTAT". The joint project of AVTOVAZ and engines JAMZ-530 can become the first hi-tech the alliance Renault-Nissan, the car under the engine site constructed in Russia for last 35 working name ?Project R90?, will occupy the years. Launch of an experimental lot of engines central place at the Moscow stand of Lada. It is is planned for the second half of 2010, the first model on the basis of the platform B0 transition to serial production - for the first in the whole line of cars which AVTOVAZ will quarter of 2011. Localization level of make under brands Lada, Renault and Nissan. manufacture of components in Russia will The wagon presented at the motor show will make about 35% at the initial stage of start to be produced serially since March, 2012 development of manufacture and when the under the brand Lada. plant reached designed capacities it will be 60- 70%. The second perspective development is a modification of the two-fuel Lada Priora CNG, Autosport: motor sport and kart cars compressed natural gas (methane) and gasoline is fuel for it. In comparison with the Motor racing industry in Russia is still in its first version for the first time presented three initial stage, though annually the quantity of years ago at the Moscow exhibition ?Interavto?, motorcycles and racers is growing. UK the modification CNG Plus possesses other businesses could take the time factor as an configuration and also a full-size petrol tank advantage. that allowed to increase fuel distance under one fuelling considerably. Russia is interested in technologies and design expertise for development of locally branded Also, AVTOVAZ is heading the project on kart racing and sport car, taking into ?Family of cars on unified platform ?/??. The consideration the novelty of this sector for former head of the design department of Russia. So far, there is one company, Marussia AVTOVAZ leaves his post and will head work on Motors, elaborated 2 sport models, using the creation of a design studio of the company in UK experts? assistance. Moscow. You can be alerted to Russia/automotive KAMAZ is working at projects of the model line opportunities on a regular basis by registering updating on four directions - a new engine, a on the UKTI website. More on UKTI?s business new gear box, a new cabin and a new all-wheel opportunities service. UK Trade & Investment Sector briefing: Automotive opportunities in Russia Major events and activities Events: UKTI Activities: International Forum Inward Mission to LCV 2010, Millbrook «AUTOMOTIVE INDUSTRY AND Contact: Svetlana Bondarko, UKTI Russia AUTOCOMPONENTS MARKET IN RUSSIA» Email: Svetlana.Bondarko@fco.gov.uk alongside the Moscow International Motor Time: 15-16 September 2010 Show (MIMS) at the Crocus Exhibition Centre August 25-27, 2010 Moscow, Russia UK Outward Automotive mission to Russia Contact: Ian Lockhart, UKTI Advanced International Forum Engineering Sector Group «THE FIRST INTERNATIONAL AUTO- Email: Ian.Lockhart@ukti.gsi.gov.uk INDUSTRIAL FORUM» Time: February 2011 alongside the 18th international automobile exhibition "Auto+Automechanika. St. Petersburg 2010" October 27-31, 2010 St.Petersburg, Russia International Conference on investment attraction to the automotive industry «AUTOINVEST 2011» February 17-18, 2011 St.Petersburg, Russia Find full details of all events in this country and sector on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Automotive opportunities in Russia UKTI Contacts Next steps - How UKTI can help UKTI Russia, Engineering Team: British companies wishing to develop their OLGA MAKARCHUK business in the Russian market are advised to Team Leader undertake as much market research and British Consulate General, St-Petersburg: planning as possible in the UK. UKTI?s team in Tel: 007 (812) 320 3200/23 Russia with its wide local knowledge and Email: olga.makarchuk@fco.gov.uk experience can provide a range of services to www.uktradeinvest.gov.uk British-based companies wishing to grow their business in global markets. SVETLANA BONDARKO Senior Trade & Investment Adviser This can include: British Embassy, Moscow ? Provision of market information Tel: 007 (495) 956 7452 ? Validated lists of agents/distributors Email: svetlana.bondarko@fco.gov.uk ? Key market players or potential www.uktradeinvest.gov.uk customers in the Chinese market ? Establishment of interest of such ANASTASIA BADINA contacts in working with you Trade & Investment Adviser ? Arranging appointments British Embassy, Moscow ? Organise seminars or other events for Tel: 007 (495) 956 7389 you to meet contacts and promote your Email: anastasia.badina@fco.gov.uk company in the Russian market www.uktradeinvest.gov.uk This work is available via our Overseas Market GALINA MOVCHAN Introduction Service (OMIS), a chargeable Senior Trade & Investment Adviser service which assists British-based companies British Consulate General, Ekaterinburg wishing to enter or expand their business in Tel: 007 (343) 379 4931; 253 5622 overseas markets. Email: galina.movchan@fco.gov.uk www.uktradeinvest.gov.uk To find out more about commissioning this work, or accessing other UKTI services and ALEXANDER PETROV specialist advice, please visit the UKTI website Senior Trade and Investment Adviser to find contact details for your local UKTI British Consulate General, St-Petersburg office. Tel: 007 (812) 320 3228 Email: alexander.petrov@fco.gov.uk www.uktradeinvest.gov.uk Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Automotive opportunities in Russia
Posted: 01 September 2010

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