How foreign automakers are fighting for sinking the Russian market
Watching the domestic car market, it is easy to fall into depression: in the four years that passed from the moment when Russia, beating Germany, ranked second in Europe for car sales, this figure has almost doubled — from 3 million vehicles in 2012 to 1.6 million in 2015. the Fall in oil prices, currency fluctuations and the war of sanctions have turned to be producers of heavy losses: the week goes to market not gone a particular model that has become not affordable for the buyers. Go and brand as a whole, and as a niche, like the Spanish Seat and mass — Opel or Chevrolet.
But not all of the players panicked. Let the annual forecast of the Association of European businesses (AEB) disappointing or minus 4.7 percent compared to last year, the Russian car market remains one of Europe’s top-5. But crisis, no matter how protracted it may be, is still a temporary phenomenon. The group today is able to strengthen its position in Russia, will handsomely pay for itself when sales will again go up.
This strategy is no secret, therefore, having gone through shock 2014, when the decline in sales has reached double digits, getting rid of the illusions of imminent recovery in 2015, a number of automakers have demonstrated a willingness to work in Russia, even at a loss.
About how car companies are fighting for the future of a place in the sun, investing hundreds of millions of dollars in a sinking market, says “Ribbon.ru”
Ford Sollers: everything goes according to plan
Other calmer in the domestic market is feeling the joint Russian-American enterprise. Although the sales of the brand in the past year fell by 41 per cent, Ford Sollers (FS) continues implementation of a large investment plan associated with the localization of production models, adopted in the pre-crisis 2011.
In March the Assembly line at engine plant in Elabuga fell five thousandth motor Duratec, 1.6-liter. And in April the company FS in Vsevolozhsk, which produces Ford Focus and Mondeo, has started mass installing these engine in the new Focus. This is the third model of the brand, equipped with the Russian engine — after Fiesta and Eco Sport.
The Duratec engine is localized in 45%: the cylinder block, cylinder head and cover main bearings are produced foundry “RosALit” and Zavolzhsky motor plant (ZMZ), and the piston — Kostroma plant of automotive components. Aluminum for parts supplied by the company “RUSAL” motor oil “LUKOIL”. These engines are expected to equip 30 percent of produced cars in Russia.
Note that Elabuga engine plant was launched in the midst of the crisis in September 2015. Declared capacity — up to 200 thousand engines per year. According to President and CEO, Ford Sollers Mark Ovenden, this is the most advanced engine plant of Ford in the world, automation of production processes is 95%. Total investment in the project reached 275 million dollars.
Hyundai and KIA: in the price
While some competitors in the budget segment are prepared to pack your bags, Korean manufacturers, on the contrary, try to expand its presence in the market. Despite the loss, the Koreans follow a strategy of keeping prices and occupy vacated niches.
Photo: Ruslan Krivobok / RIA Novosti
According to the report, Hyundai Motor company, the annual loss of plant “Hyundai Motor manufacturing” (HMMR), located in St. Petersburg, amounted to $ 17.6 billion Korean won (about 1.05 billion). On each Hyundai released a car loses about five thousand. However, such sellers like the Hyundai Solaris and KIA Rio are rising very gradually: in March, they have climbed only 1.7 and 2.8 percent, respectively.
It is paying off: in February, Solaris became the best-selling car in Russia, adding 1.6 per cent — 8310 sold cars. In a nape to it breathes KIA: plus 15.8 per cent, 7017 cars. Note that the indicators “Koreans” are growing, while, for example, Lada Granta, located on the third line of the rating (6335 units), by contrast, has lost 39.9 percent of sales.
According to leading analyst of “AUTOSTAT” Aleksey Mukhanov, successes in other markets allow Korean companies to not only accept the loss, but also to start in Russia the new models. So, in March launched the test Assembly of Creta crossover at Hyundai plant in St. Petersburg.
Toyota: doubling capacity
Without further ADO, a Japanese automobile Corporation has decided to play it safe and invest the money in the Russian localization of the best-selling crossover vehicle, the RAV4 included in the top 5 most popular SUVs of the last year. Especially for this power plant Toyota in St. Petersburg at the end of 2015 was increased from 50 thousand to 100 thousand cars a year. The extension addressed the workshops and production lines, creating 800 new jobs. Total investment in the project — 7.1 billion rubles.
The launch of production of the RAV4 is planned for August of the current year; the crossover will be the second model, after the Camry sedan, manufactured in St. Petersburg. Toyota, unlike most competitors, boasts a small, but positive dynamics of sales in the first quarter of 2016, the company added 0.7 percent compared to year 2015. The main contribution of the model RAV4, Land Cruiser 200 and Camry.
Great Wall: ready to roll
In December of last year, the brand recorded the biggest drop of sales on the Russian market — minus 94 per cent. Analysts predicted the imminent departure of the brand, but the Chinese have decided that the crisis, by contrast, may be a springboard. Great Wall Motors has been the key investor of the industrial Park “Uzlovaya” in the Tula region (volume of investments — $ 500 million). At the end of March it became known that the Park can obtain the status of a Special economic zone, promising manufacturer major tax breaks. “Hub” was included in the list of recipients of Federal subsidies in 2016.
The Great Wall plant in the Tula area starts in 2018 — workshops of stamping, welding, painting and Assembly, as well as spare parts. Advertised capacity is 150 thousand cars per year, 2,500 jobs. The plant will produce 4 models of the Haval SUV sub-brand. By this time it is planned to establish a dealer network.
Export orientation
With falling demand for cars within the country itself resolves the issue for a long time did not give rest to the Russian motorists: are “domestic foreign cars” these cars in terms of quality or not? An affirmative answer was given in August last year, when the Hyundai plant in St. Petersburg started assembling cars for Lebanon and Egypt.
Photo: Alexander Koryakov / Kommersant
Export the script was attractive to foreign producers in Russia, not wishing to “spoil” efficient production in anticipation of when the market will recover — to reduce workers and to conserve power. In January 2016 the interest in exports expressed Ford, then Renault has declared its intention to adjust the supply released by AVTOVAZ car bodies for the company in Algeria. Exports are planned to start this year, but the specific figures are not known — only reported that we are talking about thousands of bodies a year. The second participant of the Franco-Japanese Alliance, Nissan is also considering the possibility of exports from Russia to Scandinavia and Eastern Europe.
In April, the Ministry of industry and trade issued a decree: the plants, working in the framework of agreements on industrial Assembly will be able to receive subsidies for compensation of costs of transportation and certified cars. If the Federal government approves it, the manufacturers will provide one hundred percent coverage for certified vehicles and 80-50% compensation of transportation costs of cars.
