Russia: Renault/Nissan-AvtoVAZ, Ford-Sollers, and VW-GAZ to expand production

GM and Fiat increase production independently while Japanese OEMs plan production in Russian Far Eas



 In 2008, sales of vehicles in Russia totaled 2.93 million and were said to soon surpass those in Germany, the largest market (3.37 million in 2008) in Europe. Yet, sales declined by 50% to 1.47 million in 2009 due to the recession, and production of vehicles also shrank by 60% to 720,000.

 However, in 2010, with strong crude oil prices, the Russian economy recovered and the Russian government's financial support for the automotive industry and scrappage incentive program succeeded; sales of vehicles recovered to as many as 1.91 million and production doubled to 1.41 million. The Association of European Business (AEB) says that the Russian market is currently recovering to a level close to that before the recession, and forecasted 2011 sales to be 2.45 million.

 In February 2011, the Russian government issued a new regulation for vehicle assembly in order to further foster Russia's automotive industry. In order to receive preferential import duties for auto parts, OEMs are required to fulfill strict requirements including annual production of 300,000 and local-content ratio of 60%.

 Therefore, many of the overseas OEMs form an alliance with local OEMs to increase production. Renault-Nissan plans to acquire the majority shares of AvtoVAZ in order to further expand their alliance. In order to boost production, Ford forms an alliance with Sollers while VW with GAZ. GM and Fiat each prepare production facilities independently.

 Japanese OEMs such as Toyota, Mazda, and Isuzu are currently planning production in the Russian Far East. Among commercial vehicle manufacturers, Kamaz also aims to expand production, while MAN will begin production in Russia.

 (Note) Sales of passenger cars and light commercial vehicles by OEM are shown at the end of the report.