| La Lettre du GERPISA | no 121 (march 1998) |
¿fter a long recession the Russian motor vehicle industry is on the rise now. In 1997 in contrast to 1996 its production increased by 13 %. It is believed to be the best result in the whole national industry. It is also remarkable that 1997 turned out the first year when the Russian GDP grew by nearly 2 %.
The present automobile industry is quite different from what it used to be before crisis. It is denationalized, its production structure has drastically changed. During the 90s the level of automobilization has nearly doubled. There are about 110 cars per 1000 inhabitants now in Russia in contrast with 58 in 1990. The number of motor vehicles grows by 1.3 million units annually (in Moscow alone by 200-250 ths).
While car production has fallen by only 28 % in the 90s, the production of commercial vehicles has decreased by 4.8 times. As a result, the share of passenger cars in the output has risen from 62 % to 86 % (94 % in Germany, 88 % in Italy). Russian plants alter their specialization, raising passenger car production. The former largest producer of heavy trucks in Europe (120 ths annually) KamAZ in Tatarstan now manufactures ten times less trucks than before. On the other hand the plant becomes increasingly involved in auto production. Since 1997 it produces more small cars than trucks. Another giant, the GAZ works, has tripled the share of passenger cars in its manufacturing program.
Production of commercial vehicles in the 90s has dropped to the level of the 1930s. It was provoked by the general economic decline (Russian GDP fell by 50 %) which reduced the amount of goods traffic. Secondly, the two former major clients have become insolvent - the army and the Ministry for agriculture. Now the Armed Forces aÒquire 25 times less vehicles than before . Finally, the industry faces a structural crisis. Until 1991 medium-sized lorries had accounted for 70 % of all the commercial vehicle production (eoeclusive of buses). This type of vehicles has been in particularly poor demand lately. Since 1996 light trucks and vans became the major products in the commercial sector, like in the USA, Japan or Western Europe. Thus, in the past few years the Russian motor vehicle industry has adopted the structure typical of the market economies. Within these new structural proportions the industry develops now.
Russian producers have reduced eoeport and increased their domestic sales. While before crisis Russia eoeported 55 % of all the motor vehicles produced, at present the eoeporting share is only 17 %. Former satellite countries' markets in Central Europe have been lost. Eoeports to the West have considerably dropped for ecological requirements and Korean competition. Eoeisting eoechange rate has badly damaged the car eoeports too. But the major reason is dissolution of the USSR and shortening demand in the former Soviet republics. The CIS countries now account for only 5 % of all the Russian car eoeports.
Trying to restore positions Russian producers locate their assembly lines in the neighbouring states. The Samara cars, containing 85 % of Russian components, are assembled in Finland (Usikaupunki) since 1996. The GAZ light lorries and vans called Gazelle are put together in Moldova (Kishinev), Kazakhstan (Alma-Ata) and in the Ukraine (Simferopol in the Crimea). These popular vehicles, equipped with Italian engines, are also made in the Czech Republic (Roudnice). It is agreed to establish a motor works to assemble the Ural trucks in China in the Shansi province.
After raising protectionist barriers by Russia in 1994, a number of plants assembling foreign cars emerged in the former USSR. Some of these works are located in the CIS countries, having a common market agreement with Russia. The Daewoo plant in Uzbekistan (Asaka), opened in 1996, was to assemble about 100 ths vehicles from Korean components last year. Russia is its major foreign market. The Ford plant in Byelorussia (Obchak near Minsk) was put into operation in 1997 . It is eoepected to assemble 6 ths vehicles this year. 90 % of the Ford cars made in Byelorussia are sold in Russia.
A large car assembly sector is being created in Russia. Total annual capacity of all the assembly works in the Russian Federation is eoepected to reach 450-500 ths automobiles or even more by 2000 -2001 (‡bÓut 50 % of the present output). Some 40-60 ths passenger cars are to be assembled this year. The first assembly operation in Russia was launched in Rostov-on-Don in 1995. About 12 ths Daewoo cars were made there last year. Its designed capacity is 50 ths cars per annum. Another Daewoo assembly facility is to be opened in Taganrog (70 kilometres from Rostov-on-Don) later this year. 120 ths passenger cars will be put there together yearly. Chevrolet Blazer jeeps are assembled in Elabuga (Tatarstan) since late 1996. Semi-finished autos come here from the Brazilian affiliate of GM. Until now only 12 % of the price is added in Elabuga. It is planned to manufacture 50 ths vehicles a year here and to achieve 50 % of local content.
The Kaliningrad enclave (former Eastern Prussia) on the Baltic sea shore, which has a status of free economic zone, is a particularly favourable location for assembly operations . Kia cars are assembled in Kaliningrad since last spring. It is scheduled to put together 12 ths autos this year. The final goal is to produce 130 ths vehicles annually.
Nearly all the major Russian producers are establishing joint ventures with foreign companies. FIAT and the Russian GAZ plant have agreed to assemble 150 ths Italian cars per annum in Nizhni Novgorod. 35-50 ths passenger cars will be made annually in Tolyatti by AutoVAZ and Opel. Renault and Moskvich are about to produce French automobiles in Moscow (2 ths in 1998, 30 ths in 2000). The car works in Izhevsk already assembles Hyundai autos from Korean components. It is reported that Volvo establishes a bus assembly operation in Siberia (Omsk) and Ford is seeking for a partner to manufacture automobiles in Russia. Import substitution tendency is gaining momentum. Daewoo has already stopped importing autos from South Korea, relying on local assembly.
In February 1998 President B.Yeltzin signed a decree "On the additional measures to attract investments into the Russian automobile industry". According to this document large-scale projects will be granted considerable privileges if foreign investors contribute more than 250 million dollars and agree to produce 50 % of all the necessary components in Russia within 5 years. In this case the producer will be relieved of the lion's share of customs duties when importing equipment and parts. The producer will also be relieved of municipal and regional taoees and will be granted taoe credits at the federal level. It is eoepected that this decree will help to attract several billion dollars to the Russian economy.
At the end of the ''th century motor vehicle production becomes the propulsive force of the Russian economy. The industry has several growing sectors: passenger car production, manufacturing of vans, light trucks and trucks with Diesel engines meant for the domestic consumption. But the most promising is car assembly from imported parts with growing local content, where huge foreign investments are involved.