Russia Balks at Plan to Export Geely Cars Built in Belarus

VIENNA – Geely Automobile plans to assemble passenger cars in Belarus in cooperation with the country’s state-owned companies.

Although the Chinese auto maker has not announced what cars will be assembled in Belarus, the state government, which signed an agreement with Geely in December, is releasing some details on the project.

During the first phase, of unspecified length, 10,000 cars will be assembled on the premises of a supplier in Borisov, near the Belarus capital of Minsk. The second phase calls for the construction of a factory with an annual capacity of 60,000 units by 2015, with the goal to double that number by 2016.

Geely already has established two joint ventures in Belarus: Its BelGee JV will operate car assembly, while the second company, Soyuzavtotekhnologii, will handle parts production.

But even before it is launched, the Geely project is drawing criticism from nearby Russia. The concern relates to the customs union established by Russia, Belarus and Kazakhstan. Belarus intends to export some of the locally assembled Geely cars to the Russian market, and the idea does not make Russia happy.

Geely MK sedans and MK Cross hatchbacks currently are assembled in Russia by the Avtomobilnaya Kompaniya Derways in Cherkessk from complete-knocked-down kits.

“I am not ruling out Russia, which has significant capacity for car production, insisting on a substantial limit to the import of the Chinese assembly kits intended for Belarus,” Aleksander Surikov, the Russian ambassador to Belarus, told the Zvyazda newspaper in an earlier interview.

In recent years, the Belarus government has negotiated a number of such assembly projects with Chinese companies. However, Unison in Obchak, near Minsk, is the only company currently assembling cars in the country.

It builds Iranian-made Khodro Samand sedans in small volumes from semi-knocked-down kits. Only 230 Samand cars were made last year.

Belarus Prime Minister Mikhail Myasnikovich recently visited the Belarus car-assembly facility to discuss the issues associated with the Geely project.