Industry and Trade Minister Denis Manturov says some global automakers may follow General Motors and Ssangyong and abandon Russia after their agreements to assemble vehicles in the country expire in 2017-2018.
Russian automakers are expected to benefit most from the new prioritization of state subsidies, as will global companies that recently have signed agreements committing to higher levels of localized assembly and production capacity.
A GM Uzbekistan executive says the JV will pay particular attention to manufacturing SUVs and large urban sedans, but it also is devoting resources to producing a new version of the Chevrolet Aveo compact.
Sources say CEO Bo Andersson fell out of favor with Sergey Chemezov, whose company controls one-third of the automaker, because he favored foreign parts makers over local producers with suspected links to organized crime.
Russian Association of Auto Dealers President Vladimir Mozhenkov says the existing dealer network is designed to sell at least 3 million cars per year. Light-vehicle sales in 2015 totaled just 1.6 million units, down 35.7% from prior-year, WardsAuto data shows.
The reorganization plan includes terminating Jeep Compass sales. The automaker delivered only 72 units in Russia last year, down 89.7% from like-2014. The CUV was hurt by a 30% price increase prompted by the tumbling value of the ruble.
About 600,000 B-cars were sold last year in Russia and their market share, currently at 40%, is expected to grow. Among last year’s best-selling models were the Lada Granta built by local automaker AvtoVAZ, the Hyundai Solaris and Kia Rio.
Shifts at Togliatti will be reduced from two to one while retaining a 5-day workweek, and reorganization of jobs will allow production-line speed to be doubled. There are no plans for layoffs; the plant will continue to employ about 1,400 people.
The deterioration of the market has forced the government to grant additional concessions to global automakers threatening to freeze further investment in Russian production or even quit the market, as occurred last year with General Motors.
Local brands are benefiting from higher percentages of localization, price increases lower than those of foreign brands and state programs aimed at supporting demand, particularly those in the low-cost segment of the Russian car market.
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